Platform Risk: What Happened to Trustbuddy?

Platform risk is something mentioned here often yet rarely discussed in detail. Now we have an example of why thinking about the platform risk (the risk that the platform itself will go out of business) is something we need to think about and consider when it comes to investing on new platforms.

Thanks for the reminder, Trustbuddy, although you could have returned our fellow lenders' funds first.....

So what really happened to Trustbuddy?

Trustbuddy is (was?) a peer to peer lending platform based in Sweden that started in the high interest rate payday lending market in 2009 and was working to become a more general consumer based lender. They were the first publicly traded p2p lending platform as they listed on the NASDAQ OMX Nordic exchange as symbol TBDY (#SE0006600037) in July 2014, a few months before Lending Club listed here in the US.

The company was moving forward although the stock price was declining while they were transitioning their business (or so it seemed) and on August 19th they issued their Q2 Earnings with 21 million SEK ($2.5 million) in Revenue and 11.3 million SEK ($1.34 million) in EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) which is used as a proxy for Operating Cash Flow for the company.

New Management Installed

Then on August 17, Philip Mikal was named the new CEO of Trustbuddy. Mikal is a Silicon Valley guy and brought a bunch of techies with him. He talks about why he took the job in this very good article on AltFi. There he talks about better business and technological focus to increase efficiencies.

The other techies Mikal brought with him were announced, mostly from Klarna, a payments provider, and joined the team as of Sept 7. A great site for following this story in particular and Scandanavian investment environment in general is Nordic Investor.  Along with the management restructuring, they sought capital by seeking shareholder approval for the issuing of up to 200 million additional shares and warrants.

While going over the books to see what kind of company they would be running, this new management team uncovered a 44 million SEK ($5 million) 'discrepancy' that was, according to Mikal 'probably there since the very beginning of operations.' (per Statement released by their Board of Directors)

Delisting and Bankruptcy

As more information came out on this discrepancy and lender funds (funds from those investing in loans on their platform) became frozen, the company was delisted from the OMX. The Swedish Financial Services Authority forced the company to shut down operations and a couple days later Trustbuddy filed for bankruptcy protection. Lenders were owed around $2.5 million with another $1.5-2 million in loans funded but not yet assigned to any lenders with lenders money.

How would you feel if your money was frozen like it was for these people? This is what happens when platform risk gets real.

Things To Think About When You Invest

Companies are good at hiding misconduct like this at least from plain sight. Thankfully many p2p lending platforms and marketplace lending platforms generally have transparency as one of their guiding principals, especially to lenders, and I believe the risk of this on a USD based platform to be very small. Platform risk is greater in the Bitcoin space.

Here are some things I would want to know to lessen platform risk and maybe some of these will help you.

1) How long have they been in business?

Usually longer time in business is better although that wouldn't have helped in this case. My personal rule is that I don't invest on a platform as a little retail investor (especially in the Bitcoin space) until they have been around for a year.

2) Who regulates them? Is it the securities agency or some other agency?

3) Are they in compliance with that agency?

You should be able to ask and they should be able to tell you. This is a reason why I avoid a growing BTC lending platform who I believe is clearly skirting compliance rules and I think will get hit hard for it. It's not one of the big 3 where I currently invest.

4) Is there any backup plan of servicing or banking to take over should the platform fail? Lending Club and Prosper both have this and while how effective this would be is a question, it's good for us lenders and the platforms to show they are thinking about this risk.

5) What is the lender withdrawal process like and how long does it take?

I would do a small withdrawal to see how the process works and how long it takes. Is it a PITA to do? Is it automated or does one or more than one person have to do it manually? You can bet if a platform runs into financial trouble that those people will suddenly not be available for manual withdrawals.

6) Has the company gotten outside funding/investment?

Running a tech heavy platform is expensive. Self funded bootstrapped platforms are something to admire and encourage yet a cash crunch or just plain running out of money to finish development of the applications is far more likely without sizable outside funding.

Let's hope like I believe that Trustbuddy will be seen as an exception and a reminder of something to be aware of and not something to discourage us from investing on p2p lending platforms now and in the future.

About the author

Stu Stu Lustman, the author of this post, is a Credit Analyst by trade trying to bring Commercial Credit Analysis techniques to the world of Peer to Peer Lending. Check me out on Twitter, LinkedIn and Google+

15 thoughts on “Platform Risk: What Happened to Trustbuddy?

  1. Well that was a thoroughly well researched account and much more detailed than most that I have read in the mainstream media.
    Reporting quality has been pathetic in the UK Times and Telegraph who have virtually paraphrased the Trustbuddy website statement.

    Let’s consider the liquidator’s situation. They have a loan book that they have to dispose of.
    As a lender (of a small proportion of my funds) to Trustbuddy borrowers I can still see my funds being gradually returned. About 25% so far but over a full month this will increase. But the message on the facebook chat is that “now Trustbuddy is bankrupt we don’t need to repay our loans.”
    A peer to peer lender going bankrupt is relatively new. So consequences have not really been thought through.
    You see Trustbuddy lent money at 12% per month or 144% per year.
    But 144% per year compounded monthly is equal to 390% after one year.
    I like Beer too and I am never going to be strapped for the cost of a pint again!
    Because there are very limited options available to the liquidators.
    Firstly they have to decide if lenders’ funds are truly segregated from the Trustbuddy finances.
    If not they will use returning lenders’ funds and loan interest to pay off both the lenders and other business creditors?
    But if lenders funds are considered segregated then any amounts stolen by Trustbuddy employees are proceeds of theft and must be returned to the lenders from any Trustbuddy employees or business accounts before the company’s debts are repaid.
    The most probable outcome is that the liquidators will on legal opinion decide that lenders’ funds are segregated. If not there will be a single point for a class action against the former owners of Trustbuddy and the liquidators themselves.
    Trustbuddy will have written the loan agreement between each lender and their borrowers at the full interest rate of 12% per month and then reduced the lender’s return by making charges rather than taking a share of the interest.
    When the liquidators wash their hands of the loan book they will not be able to sell the individual loans on to a debt collector because the loans themselves are not Trustbuddy property.
    They will then decide to return whatever money has already been returned directly by the borrowers to the lenders and leave the lenders to collect the rest.
    Then they will just hand the loan agreement / contract details / names / addresses etc. to me (the lender).
    Don’t forget P2P lending sites set up legally binding loan agreements between individual lenders and borrowers.
    You see where this is leading.

    Every Trustbuddy lender is going to be handed a lot of legally enforceable loan agreements with an interest rate of 144% per annum monthly compounded.

    This represents a return on investment of nearly 400% per annum.
    I would be surprised if some of the geeks in Trustbuddy had not also figured this out for themselves.
    At this point it really is in the interests of the borrowers to repay the Trustbuddy loans in full within the one month term. They should also ignore any advice to the contrary.
    The debt collection agencies used by Trustbuddy to collect delayed repayments are regulated.
    People who lent money through Trustbuddy are not and will undoubtedly be very creative in their debt collection strategies.

    • Thanks for the kind words, Benedikt. I agree that this is new and hopefully unrepresentative of the industry as a whole. I’m glad the agreements are legally enforeceable and written in a strong enough way to increase the chances of collection. I wish you and the other lenders luck in collecting.

  2. Hi Stu,
    I am still an enthusiast on the idea of peer to peer lending.
    It is an idea whose time has come. Banks have had their day and the model of huge premises and massive overheads is untenable. Even money as a medium for exchanging wealth for property and the reverse will end up being replaced.
    But to the main subject “Trustbuddy”.
    It appears that (In Denmark) a number of responsible borrowers taking advantage more than 3 times of the “2 week payback no interest” terms were refused further loans by Trustbuddy.
    All this demonstrates is that there was high liquidity in the loan market and Trustbuddy were doing their best to concentrate loans on people who actually needed to borrow money and would probably overrun the 2 week interest free period. But the pressure is apparent because rather than using the legitimate trustbuddy lender’s money where this would not represent any loss (merely an absence of gain) they were actually using borrowed money on which they personally were having to pay interest. Hence all the bollocks about “Buddy Lending” was just bollocks.
    Example and comment: https://dk.trustpilot.com/review/trustbuddy.com/dk
    >>>>>After three loans, one will be denied and rejected. It is not even an explanation of the rejection. Trust Buddy does not play with open cards. It is very BAD style. I can not recommend this to others.<<<>>>
    http://digital.di.se/artikel/trustbuddys-vd-jag-har-haft-battre-dagar
    >>>
    The ongoing investigation shows that TrustBuddy have used lenders’ capital inconsistent with their instructions. It is primarily about the man used the money markets to finance new loans without the lenders’ consent.
    “We discovered this last week. It seems to have used the lenders’ money to ?uttöka? loan portfolio more than has been agreed,” said Philip Mikal, president of TrustBuddy.
    TrustBuddy is a so-called “peer-2-peer” -plafform, it means that the company’s task is only to connect lenders with borrowers. Instead TrustBuddy then devoted himself to lend more money than you have coverage, similar to traditional banking. Of the 300 million TrustBuddy lent to 37 million are not linked to any specific lender.
    “You’ve spent money as if it were one’s own. Lent them and thus create revenue for the company,” says Philip Mikal.
    The wrongful lending seems to have lasted as long as the company has existed, according to Philip Mikal.
    Has thus had a sort of secret business model?
    “It seems so, but we can not know for sure yet. The investigation will show how deliberately it has been.”
    Will the police be connected?
    “Yes, we will hand over this to the police so they may determine if it committed any crime here.”
    All persons who previously held management TrustBuddy have either left the company or have been suspended. It is impossible to deposit or withdraw money from TrustBuddy and when the trading halt will be lifted is still unclear.
    “We’ll try to find the best possible solution for everyone involved. What it is we do not know,” said Philip Mikal.
    TrustBuddy has been in the tempest earlier and was just about to implement a new share issue to ask about the company’s business model. Now it is threatened by both escape from lenders lawsuits and funding shortages.
    <<<<<<
    Interesting mention of lenders lawsuits.
    Lenders' law suits is not the way forward.
    That will just enable the liquidators to delay any resolution.
    Just return all the lenders funds from the Trustbuddy Company and Employee dealer accounts to the respective lenders' accounts.
    Then hand over the entire loan portfolio to a reputable debt collector (Maybe that's an oxymoron) and make sure the lenders get their money back with due interest.
    But there is a lot of detail here that we have not had the benefit of from out Times and Telegraph.
    The translation is not 100% reliable but it is appearing to suggest that Trustbuddy employees were borrowing from elsewhere in order to lend. And when lones went bad they attributed these to legitimate lenders and swopped good loans from legitimate lenders to their own accounts that were financed by borrowed money.
    So now when the whole thing collapses it becomes more obvious why it is beyond the wit of the dogs bollocks of new directors and the appointed liquidators to sort the mess out.
    They simply took one look at it and collectively shat themselves.
    The trustbuddy company (its employees) has borrowed money to lend money.
    When loans went bad they transferred the bad loans to legitimate lenders.
    They also stole legitimate lenders (good) loans for personal profits and to be able to repay loans taken out by themselves that had been lost on bad loans.
    The hope of the legitimate Trustbuddy client lender like myself rests in the balance with the liquidators decision on the issue as to whether my funds were invested in Trustbuddy itself or whether my funds were (segregated) and invested in individual loans to specific borrowers.
    My understanding has always been that I was investing in loans to individuals who were personally responsible to me for their repayment.

    Benedikt

  3. Some more research on the Trustbuddy scandal.
    The first link is to quite recent comments and the second goes back a long time.
    Looks like the warnings were there back even in 2014. But there was a burst of activity during September 2015. Probably “friends of friends” knew what was actually going on.
    All of it unfortunately in Swedish and some Danish, but one can use google translate.
    For Ubuntu read “Flashback.org” – the second link below.

    Very interesting is the phrase “other people signing up and taking over your bad debt.”
    When you read the Letter to Lenders” http://investor.trustbuddy.com/wp-content/uploads/2015/07/TB-Lender-Letter.pdf
    You see where this comes from:

    >>>>>>>>>>>>>>
    Furthermore, the Company’s practice, as regulated in the TrustBuddy’s terms and conditions, of facilitating liquidity under certain circumstances by transferring existing loans between lenders, has proven inefficient. TrustBuddy has therefore decided to change its terms and conditions as they relate to this practice.
    But the comment appears to post-date the letter.
    <<<<>>>>
    The result of the Company’s previous operational routines has led to a number of our current lenders owning loan portfolios that exhibit relatively low returns and lower than expected liquidity, under the company’s current operational practices for new loans.
    <<<<<>>>>>>>
    Pyramid scheme – avoid!

    It’s fine and the returns on the website look great. The only problem is When You try to get your money out. You have to wait for other people to take over your loans before They’ll let you take your money back. People have been trying for the past two years unsuccessfully – see the Ubuntu Forums thread. They have over 220 million SEK in non-performing loans. Some people have a majority vote of bad debt in Their Portfolios Which They will likely never get back. This Means That the only way to get money back is by other people signing up and taking over your bad debt. Their share price is going down the toilet Because Their shareholders know that the business model is a scam.
    <<<<<<

    Then there is:
    https://www.flashback.org/t1580901p272

    But to cut a long story short what comes across is that these guys were not "gung-ho" IT enthusiasts that thought they had had a great idea and then lost control. They were simply crooks. The shareholders stepped in to cut their losses but too late.
    But what is also apparent is that some of the controlling shareholders are complicit in the fraud and are themselves potentially liable for the losses of other parties, in particular the losses of the lenders.
    Because if the controlling shareholders already had the level of control required to change out the management of Trustbuddy and the understanding of why it was necessary then they were also in control of and responsible for the situation as it was prior to the declarations of criminal misconduct and bankruptcy.
    It now depends if the Liquidators are genuinely independant or actually part of some cute little deal with the shareholders. My guess is that they are onside with the shareholders to ensure that lenders get next to nothing and whatever lenders funds and interest are returned are not segregated, shareholders escape without scrutiny of their roles or actions, former Trustbuddy management go to jail (as they should) or walk away free in return for their silence (as they should not).

    Benedikt

  4. The Trustbuddy Liquidators Letter to Lenders and my response.

    To TrustBuddy AB’s (publ.) lenders Stockholm, 11 November 2015
    LOANS MANAGED BY TRUSTBUDDY AB (PUBL.) IN BANKRUPTCY

    TrustBuddy AB was declared bankrupt 19 October 2015 and the District Court appointed me as official receiver in the bankruptcy.
    As has been reported in media there are a number of complex legal issues to consider in the bankruptcy.
    The seþup of “peer-to-peer lending” is based on the assumption that TrustBuddy has only acted as an arranger of the loans between lenders and borrowers.
    Due to how TrustBuddy has managed the loans and funds there are some uncertainties whether certain loans between lenders and borrowers are traceable and also what the legal consequences of the language used in the terms and conditions of the loans are in relation to the lenders’ rights in bankruptcy.
    Another question is whether the lenders with funds deposited in TrustBuddy are entitled to segregate its funds standing on the company’s client accounts as per the date of the bankruptcy, and if these lenders have a collective proportional right in relation to each lender’s individual claims against TrustBuddy with regard to received loan payments from borrowers.
    The same question arises in relation to outstanding debts, which are being paid during the bankruptcy proceedings.
    There are a number of immediate issues which must be addressed regardless of the answers to the questions above.
    As the bankruptcy trustee, I am responsible to ensure that the property does not lose its value during my bankruptcy administration.
    ln view of the proportion of bad debt (the company has assessed that at least 5/6 of the outstanding loan amounts are considered to be “bad debts”) and also that these loans rapidly deteriorate in value drastically I have decided to take the following measures to maintain the value of the outstanding loans: 1.
    The bankruptcy estate does not intend to enter into any existing agreement with lenders.
    Please consider the following points as the conditions of services delivered by us, as the bankruptcy estate.
    2.
    The bankruptcy estate will, when necessary, resume collection actions on behalf of the lenders by signing short-term contracts with existing debt collection agencies.
    The cost of these measures will be charged in the same way as they have been prior to the bankruptcy.
    3.
    My assessment is that the loan portfolio will lose value unless a new party promptly takes over the administration of it.
    As each loan is fragmented between a large number of lenders in small portions and individual recovery of these parts may give rise to legal difficulties, including but not limited to how paid instalments in a fragmented loan should be allocated.
    Also, the cost of recovering the loans in such way would be substantial.
    The bankruptcy estate therefore intends, with the lender’s best interest in mind, to sell the loan portfolios to the highest bidder and we believe that the bankruptcy estate is entitled to do this also if considered to be made on behalf of lenders.
    The distribution of the revenue from such sales will, in the event the loans are shown to constitute segregated property and this in practice is possible, be distributed to the lenders on the basis of two purchase prizes, one for fresh loans and another for bad loans.
    The above constitutes emergency measures taken to prevent that the value of outstanding loans deteriorate further.
    With respect to the rising and urgent situation, we ask you, if you have any objections, to contact us no later than next Tuesday, November 17,2015 at trustbuddy@lindahl.
    se.
    Kind regards MY RESPONSE >>>>With respect to the rising and urgent situation, we ask you, if you have any objections, to contact us no later than next Tuesday, November 17,2015 at trustbuddy@lindahl.se.
    <<<<<>>>Please consider the following points as the [conditions of services] delivered by us, as the bankruptcy estate<<<>>>>2.
    The bankruptcy estate will, when necessary, resume collection actions on behalf of the lenders by signing short-term contracts with existing debt collection agencies.
    The cost of these measures will be charged in the same way as they have been prior to the bankruptcy.
    <<<
    >>>>The bankruptcy estate therefore intends, with the lender’s best interest in mind, to [sell the loan portfolios to the highest bidder] and we believe that the bankruptcy estate is entitled to do this also if considered to be made on behalf of lenders.
    The distribution of the revenue from such sales will, in the event the loans are shown to constitute segregated property and this in practice is possible, be distributed to the lenders on the basis of two purchase prizes, [one for fresh loans] and another for bad loans.
    <<<<<>in the event the loans are shown to constitute segregated property<<<< The loans are segregated property.
    The loans are written between lender and borrower with an interest rate of 12% per month, 144% per year.
    Compounded monthly that is 400 % per year.
    There is a legally enforceable contract in place for every loan and the outstanding value doubles every six months that payment is delayed by a borrower! Maybe it would have been bad publicity for Trustbuddy previously to pursue repayment of these escalating loans but I have no such concerns.
    I do not agree that you can just [sell the loan portfolios to the highest bidder].
    Prior to your entering into any agreement with a [bidder] debt collection agency it must be agreed that: The loans remain the segregated property of (me) the lender.
    That only the right to collect the loan and interest and principle at a reasonable commission rate is contained in the agreement with the debt collector.
    That the principle and compound interest on any unpaid proportion of the loan continues to be the property of, and to accumulate to, the benefit of the original lender (me) and cannot be released by any other party except on payment in full of the outstanding amounts due.
    Under no circumstances shall the title to the principle pass to the debt collection agency for some paltry sum.
    Worst still that that this money should be stolen and used to repay the personal debts of Trustbuddy management.

    Have I made myself clear?

  5. Thanks Stu.
    Please edit to separate my response text so it is clear where the letter finishes and where my response begins.

    MY quotes from the text of the letter;

    Quote: “With respect to the rising and urgent situation, we ask you, if you have any objections, to contact us no later than next Tuesday, November 17,2015 at trustbuddy@lindahl.se.” Unquote.

    Quote “Please consider the following points as the [conditions of services] delivered by us, as the bankruptcy estate.” unquote.

    Quote “2. The bankruptcy estate will, when necessary, resume collection actions on behalf of the lenders by signing short-term contracts with existing debt collection agencies.
    The cost of these measures will be charged in the same way as they have been prior to the bankruptcy.” Unquote.

    Quote “The bankruptcy estate therefore intends, with the lender’s best interest in mind, to [sell the loan portfolios to the highest bidder] and we believe that the bankruptcy estate is entitled to do this also if considered to be made on behalf of lenders.
    The distribution of the revenue from such sales will, in the event the loans are shown to constitute segregated property and this in practice is possible, be distributed to the lenders on the basis of two purchase prizes, [one for fresh loans] and another for bad loans.”
    Unquote.

    Quote” in the event the loans are shown to constitute segregated property” unquote.

    My response in detail begins here:
    The loans are segregated property.
    The loans are written between lender and borrower with an interest rate of 12% per month, 144% per year.
    Compounded monthly that is 400 % per year.
    There is a legally enforceable contract in place for every loan and the outstanding value doubles every six months that payment is delayed by a borrower! Maybe it would have been bad publicity for Trustbuddy previously to pursue repayment of these escalating loans but I have no such concerns.
    I do not agree that you can just [sell the loan portfolios to the highest bidder].
    Prior to your entering into any agreement with a [bidder] debt collection agency it must be agreed that: The loans remain the segregated property of (me) the lender.
    That only the right to collect the loan and interest and principle at a reasonable commission rate is contained in the agreement with the debt collector.
    That the principle and compound interest on any unpaid proportion of the loan continues to be the property of, and to accumulate to, the benefit of the original lender (me) and cannot be released by any other party except on payment in full of the outstanding amounts due.
    Under no circumstances shall the title to the principle pass to the debt collection agency for some paltry sum.
    Worst still that that this money should be stolen and used to repay the personal debts of Trustbuddy management.
    Have I made myself clear?

    I suggest any other cheated lenders adopt a similar stance. Failure to do so will consign our funds to permanent and unretrievable loss.

    Benedikt D. Hobart. Arranger of Bilingual Spanish / English books.
    http://www.amazon.co.uk/The-Four-Horsemen-Apocalypse-Spanish-English-ebook/dp/B00H8YH5HC
    http://www.amazon.co.uk/Blood-Arena-Translated-Bilingual-Spanish-English-ebook/dp/B00M0DTW72/ref=sr_1_2?s=digital-text&ie=UTF8&qid=1447451989&sr=1-2

    I lost a shitload of money to these Swedish and Norwegian punks so I need to sell some more books!
    Just joking!
    But I am a real person and I did work to earn the money I invested and now appear to have lost.

    • Hi, i am from spain i lost money too with “trustbuddy. Today layer send me a letter about a colective claim.
      What are you doing now? Did you clain in a judgment or you only are waiting like me ? What can i do?…thank you

      • Thanks Stu and Cheated Lender for your information on the subject. I’m from the Netherlands and have lent money through Trustbuddy as well. I’ve received the same letter Andres is writing of. For your information, I’ve copied the text below.

        “Outstanding loans in Trustbuddy and the management of lenders outstanding claims
        The last few days we have received many questions about our intentions on managing the outstanding P2P-loans in Trustbuddy. The questions mainly originate from lenders having received a letter from representatives of a number of Nonruegian lenders, whom each has larger outstanding loan in Trustbuddy.

        The letter contains a description of this lenders’ initiative and a request for a power of attorney to, amongst other things; collect claims on behalf of other lenders. The deadline for the request has been set for 11 January and the letter further states that the authorisation is dependent on receipt of authorisation from 2/3 of the entire group of lenders. lf you do not actively respond to the letter you have not given your authorisation to the group.

        The background for the initiative is the analysis of the bankruptcy estate that the claims and accrued amounts from borrowers is not part of the bankruptcy estate. The claims belong to the lenders due to right of separation. When it comes to outstanding claims, each individual lender has a right of separation if his/her claim can be individually identified. Regarding received payments on loans, which were in the bankruptcy estate’s proceeds on the date of bankruptcy, there is a collective right of separation for the lenders. The collective right of separation applies to so called “active capital, “stopped capital”, and partial payments on loans, which were not reported back to lenders but lent out again, without being applied to any particular lender.

        ln our previous letter the bankruptcy estate suggested that the claims should be sold the lenders carrying a joint risk for the discount. We got offers from collection agencies to buy the claims outstanding on the Swedish market for up to 40 %. On other markets the offered price was lower. After discussions with the group of lenders, who have now sent out the letter with the initiative mentioned above, they strongly opposed us selling the stock. lnstead they informed the bankruptcy estate that they wanted the claims to be collected. lt was their belief that this solution would be more beneficial for the lenders. The bankruptcy estate asked collection agencies to submit offers on collecting the claims on behalf of the lenders. We received two well-grounded offers, meaning a final cost for the lenders amounting to 25 % of recovered claims’ following 9 months after starting the collection. During the first 9 months the agencies would not charge any fees. ln addition to these costs, there would be costs for the bankruptcy estate to deal with the collection on behalf of the lenders.

        Following our presentation of the offers we had received for the Norwegian lenders, they
        took the above mentioned initiative to form a group to manage the collection of claims
        on behalf of lenders. We have notified them that on a principle level we have no objections to this. The offer of managing the collection through the bankruptcy estate is an offer made in the interest of helping the lenders in a difficult situation. The bankruptcy estate has no own interest in this. lf the collection can be handled more efficiently by the Norwegian group we have no objections in that respect. lf such organization can be formed we will of course be helpful with providing the information we have. One example is the importance of separating the claims that can be individualized from the claims that have with a joint right of segregation to funds on the client accounts. Those lenders must be treated as a separate collective in this respect and their interest must be protected during the process.

        The bankruptcy estate does not and cannot give any advice or take a stance for how you, as a lender, should act and deal with the letter and offer. However, we stress the urgency of the collection of claims get started one way or another, and we will cooperate and be helpful in finding practical solutions for any questions arising on the way.” *end quote*

        I myself are a little bit lost regarding the action I should take after reading this. What I’ve understood is that a group of Norwegian lenders is forming a cooperation to start collecting their outstanding loans, and they have asked their fellow Norwegian lenders for approval to do this for them as well. Do I understand correctly that the bankruptcy estate – together with debt collection agencies costing 25% of the outstanding amount – will start with the loan collection for the rest of the lenders?

        If this is the case, I would be happy to agree if that gives me a chance of getting some of the money back without having to chase it myself.

        If you would be so kind, please shed your light on this.

    • Hey Benedikt, here is my answer to their letter origiating Nov.11, 2015

      I don’t understand why should I, as a lender, be a part of bankruptcy process for Trustbuddy. I am not a shareholder, I was just lending to third parties using their platform.

      Why do you still pay their workers when it was said that some of them were included in fraud. So you still pay them from my money?!

      Not mentioning that I stopped my lending in March and was not able to withdraw my money as they won’t let me do it. This was long before everything that happened in October!!

      From this point I can only promise you that I’ll ………….(these wern’t nice words)

      And I don’t agree with your intentions mentioned in email attachment, because it looks like everybody else will be making money out of our misery.

      • I tried to get out the money in november of 2014 but they needed a number for international trasferetial. I gave them 3 time mi complet number bank and they tell me 3 time we cant do it . finnally i live money there because it was growing 12%…wherever.

        The letter it is not clear. It is imposible all leander reclaim “individual” our money because we are too many and we live in many diferent part, we cant go to sweeden or norway for that.

        the higest worker of trustbudy have two ways or pay us back or goin to jail because they lend money to people unknow. they come back us capital at beging and interes they can keep it.

        i think just like you…the letter say ” we are going to ear money with this, and lender going to lose everything”

        I want a foro/ forum lender affected can speak about it .

        thank you all for read my tears

  6. Hey Benedikt, this was my answer to their letter originating Nov. 11, 2015. I believe I made my point clear even though my English is not as good as yours.

    I don’t understand why should I, as a lender, be a part of bankruptcy process for Trustbuddy. I am not a shareholder, I was just lending to third parties using their platform.

    Why do you still pay their workers when it was said that some of them were included in fraud. So you still pay them from my money?!

    Not mentioning that I stopped my lending in March and was not able to withdraw my money as they won’t let me do it. This was long before everything that happened in October!!

    From this point I can only promise you……………………. (this weren’t nice words)

    And I don’t agree with your intentions mentioned in email attachment, because it looks like everybody else will be making money out of our misery.

  7. I tried to get out the money in november of 2014 but they needed a number for international trasferetial. I gave them 3 time mi complet number bank and they tell me 3 time we cant do it . finnally i live money there because it was growing 12%…wherever.

    The letter it is not clear. It is imposible all leander reclaim “individual” our money because we are too many and we live in many diferent part, we cant go to sweeden or norway for that.

    the higest worker of trustbudy have two ways or pay us back or goin to jail because they lend money to people unknow. they come back us capital at beging and interes they can keep it.

    i think just like you…the letter say ” we are going to ear money with this, and lender going to lose everything”

    I WANT A FORO/FORUM WHERE LENDER CAN SPEAK OURSELF ABOUT IT

    thank you all for read my tears

    • Andres,
      I am sorry to hear about your story which is however similar to mine. We must be persistent with our claims, to get our money back or to see somebody going to jail.
      At least it has been proven now that those people from North of Europe are not any better than Southern. I am glad that Greece rip them of.

  8. Hi Stu & All.
    Been a long time.
    I did get a payment of about 15% of what I lost and there is possibly more to come – Ref the letter below.
    Some questions remain.
    Has 85% of my money plus interest been stolen?
    This was not a poor quality investment that underperformed this was theft.
    If so:
    Who has been charged with theft?
    Who has gone to jail?
    There is a crime here and a reasonable expectation that the national government having juristiction should procecute individuals.
    When individuals have been prosecuted then those who have lost money can place low cost (small claims court) legal claims for recovery of the stolen money? (difference between actual investment and what is recovered by (Styringsgruppen) Any thoughts?

    An alternative view is that anyone can set up a company, defraud loads of people in the name of the company, sell the company by selling their shareholdings, and walk away with no liability to the clients and shareholders of the company.
    Why have the individuals responsible for the illegal actions resulting in the collapse of Trustbuddy not been criminally prosecuted?

    >>>>>
    Letter to lenders that has provided loans through the Trustbuddy lending platform.
    Oslo 17.11.2016
    FIRST PAYMENT MADE
    We can after long time waiting inform you that the first payments were made Friday 14th October and Monday 14th November 2016 .
    Payments were made to all lenders who have given us the authority and would receive a payout of over NOK 5000, – or 550 EUR.
    If your first estimated payout is less than NOK 5.000 you will receive payments at a later time.
    If you have not received any payment, this is either due to that your bank account does not accept Norwegian currency or we have a wrong bank account.
    SKANDIABANK IN SWEDEN
    Skandiabanken in Sweden does not accept NOK (Norwegian kroner). Those who have an account in this bank must open an account in another bank that accepts NOK.
    In order to make future payments you must ensure that we have the correct IBAN and BIC. Your bank may provide you with the correct information. YOU MUST ALSO ENSURE THAT YOUR BANK ACCOUNT ACCEPT NORWEGIAN CURRENCY. DUE TO COST WE CAN NOT MAKE PAYMENTS IF YOUR ACCOUNT DOES NOT ACCEPT NORWEGIAN CURRENCY.
    If your first estimated payout is less than NOK 5.000 you will receive payments at a later time.
    CORRECT FILLING ACCOUNT NUMBER, IBAN AND BIC.
    FOR NORWEGIAN ACCOUNT:
    For Norwegian accounts, one should not enter IBAN and BIC.
    EXAMPLE: 12345678910 (no sign / spaces between the numbers)
    FOR FOREIGN ACCOUNTS:
    For accounts outside Norway, should only enter IBAN and BIC, no account number, remember also the appropriate country code.
    EXAMPLE: SE123456789010000001 (no characters between letters and numbers).
    MAKING SURE THAT YOU ARE REGISTERED WITH CORRECT INFORMATION- PROVIDE US WITH A POWER OF ATTORNEY
    You may update your profile with correct information, by the link ” Click to verify your profile information” on top of this letter.
    Power of attorney might be provided the same way by crossing out for POA. If you have not given a power of attorney already, you will get your payment at the next payout.
    KEEP IN MIND THAT THE ACCOUNT YOU REGISTER REQUIRES TO BE ABLE TO RECEIVE NORWEGIAN CURRENCY
    The possibility to update your information will not be closed prior to the 30th November 2016.
    NEXT LETTER OF INFORMATION
    This is scheduled to be sent out in early December, with more complete information from Alektum, and the progress on the debt collection
    Your sincerely
    Styringsgruppen for långivere som har ytet lån over Trustbuddy-plattformen

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