Mintos Investor Q&A: Funds in recovery, March 2023

To cover topics of interest when it comes to funds in recovery, we asked investors to submit their questions via Slido.

We grouped your questions into 3 themes that emerged as the most popular:

I – Questions about the status of Russian lending company funds
II – General questions about funds in recovery (and more) on Mintos
III – Lending company-specific questions about funds in recovery

No new defaulted cases occurred during Q1 2023; however, work is still ongoing for several of the defaulted cases that occurred before Q1.

We also want to remind you that we recently launched a new overdue page to improve transparency around overdue payments. This page shows you a breakdown of your payments that are in recovery and the recovered amounts. It replaced the current “In Recovery” page on your Mintos account and will be accessed the same way. All cases with a delay of more than 7 days are not under pending payments, but are moved to the overdue page and shows as temporarily overdue. For best user experience, view on our website as app is still under construction.

Status of Russian lending company funds

What actions are being taken against Russian banks, provided they are unable to make payments and are in a state of technical default?

Sometimes, lending companies switch to new banks that better cooperate with the company. We’re providing all banks with all requested information as soon as possible to release the payments faster, but we’re not able to control the banks’ processes and work.

We’ve been working hard to set up the infrastructure for receiving the payments in a compliant manner and have received additional payments. However, there still might be delays that are outside our control.

The Russian lending companies are facing significant limitations imposed by the local authorities when it comes to making transfers related to investments. Since the moment when payment flows were interrupted back in March 2022, we have been actively working to recover these funds. During this period we have:

  • Analyzed alternative payment routes to recover funds. During this period, various limitations, laws, and their interpretations have been changing along the way. Moreover, the lending companies in Russia are regulated by the Central Bank of Russia and need to follow its guidance, as otherwise they risk losing their license. We have come to the conclusion that receiving any payments larger than RUB 10m per month would currently only be possible if special permission is granted. There are no clear rules how and when such permission would be given.
  • Set up accounts with a service provider that accepts RUB payments. This is not a trivial matter in the current environment. Accepting RUB payments is important, as limitations for transferring foreign currencies (such as EUR) from Russia are even stricter.
  • Negotiated and signed agreements with the lending companies (some are still in progress) to be able to receive RUB 10m per month. The need for these agreements results from unclear requirements and their interpretation. In the current environment, even the delivery of any signed versions of such agreements, which are required for making payments, is not straightforward.

The lending companies are either holding repayments from borrowers for loans that investors on Mintos have invested in as cash, or using them to issue new loans, until they are able to transfer the money to Mintos. This depends on the lending company, and in many cases in our understanding would be a combination of both.

Can you update us about locked funds from Russian territory? When will these funds be unlocked?

Unfortunately, in the given circumstances with significant uncertainty lying ahead in relation to Russia, it’s impossible to confirm that 100% recovery of all funds can be achieved. The result may also vary by lending company. It would depend on the size of the portfolio funded and the company’s ability to get special permission for making larger payments. Nevertheless, we currently believe that the majority of the funds should be recoverable. There is still a high degree of uncertainty due to the political situation. Mintos is also not receiving the full loan level data from the Russian lending companies. Any repayments received so far and in the future are being distributed proportionally to all investors with relevant exposure.

Check out our blog Russia – Ukraine war updates where we post regular news for more information.

Why did Mintos wait 5 months to inform investors that Kviku was not cooperating? How will Mintos improve communication?

We always try to communicate to investors as transparently and as fast as possible. When it comes to recovering funds for investors, disclosing too much information can hurt these recoveries. Therefore, given that there were ongoing discussions about signing agreements with other lending companies from Russia, we were not able to disclose all the information about Kviku at that moment.

Please explain the legal possibilities to force Kviku to adhere to its contract? Do they have operations outside of Russia?

We can proceed to courts in Russia, which is one of the options considered. However, it should be taken into account that EU countries are considered “unfriendly” countries by Russia, therefore there might be some limitations to successfully litigate in Russia.

As far as we understand, the owners of Kviku have operations outside of Russia, including in Europe (also P2P lending on However, these are not legally in the same group as the Russian lending company we cooperated with. Before the war, we could legally litigate either in Russia or in Latvia. However, litigation in Latvia is no longer possible because decisions by a Latvian court cannot be enforced in Russia due to the Russian war in Ukraine.

From your news, I understand that Kviku has unilaterally decided to repay all loans in RUB (and not in EUR). However, my Kviku loans in RUB are also withheld, why?

Kviku has unilaterally (and per our understanding illegally) stated that the repayment will be done on 31 December 2026. We don’t agree with the position of Kviku. Loans in RUB are being withheld by Kviku until 2026 regardless of currency.

What is the expectation of recovering funds from Kviku considering the position of the company?

Kviku as a company should be able to repay all debts owed to investors. Given the current restrictions imposed on payments, it might take a long time to make these payments (for example, 10 million RUB per month), or could be repaid earlier with some cut on the amount if approvals are received. However, currently the key issue is their unwillingness to make payments. At the moment, the recovery situation is quite uncertain. However, after successful implementation of debt recovery activities, we could recover up to 50-70% of the amounts due from Kviku after costs.

Is Creditter paying back its debt and money withheld due to sanctions? What is the situation?

Creditter’s bank approved the amendments to the agreements. The lending company transferred RUB 10 million in EUR to us, which is the monthly limit imposed by the Central Bank of Russia. The money was distributed to investors on 2 March 2023. Creditter also made another payment at end of March.

Why didn’t I receive any January payment from Lime Zaim?

The situation with payment service providers is changing rapidly due to external circumstances. The January 2023 payment was initially declined by the service provider, as it stopped accepting RUB. The service provider has now informed us that it’s able to receive RUB again, and the lending company will initiate the transfer once more.

General questions about funds in recovery (and more) on Mintos

What is happening with the investments with a buyback obligation that are still in recovery from 2021-2022? What is the buyback obligation for if it is still in recovery?

A buyback obligation is a credit enhancement given by the lending company or other entity of a lending company group to the issuer for a particular loan. If the loan is more than 60 days late, the lending company has to buy back the loan from the issuer at nominal value plus accrued interest. The buyback obligation protects for the majority of borrower defaults, but there are some cases when the lending company defaults.

Learn more about how buyback obligations work for investments in loans by means of assignment agreements

Learn more about how buyback obligations work for investments in Notes

Recovery in March 2023 was announced. Why can’t I see any impact of it on my overdue amounts (lending companies on the list)? When and how will the arrears be paid out by Mintos?

We distribute funds to investors as per the waterfall clause in the Mintos Terms and Conditions. Loans are repaid in historical order, from the oldest to the newest. First, loans with underlying borrower repayments are covered, then loans that the lending company repurchased are covered, then loans that are 60+ days late are covered.

Learn more about how recovered funds are distributed to investors

Recovered payments distribution flow

Would it be possible to have an expected recovery individualized by customer, based on Mintos’ criteria for the funds distribution?

Recovery depends on a number of external factors which we can’t control. Because of this, we can’t provide expected recovery for all cases with high accuracy. However, you can reach out to Mintos Investor Service, and they can provide an estimate given you have individual investments in each of the loans.

The new overdue page now informs about the recovery %, but the pending amount remains the same. Have the funds already been transferred, or is it an update issue?

Initially, not all pending payments were transferred to the overdue page. This is no longer the case as of 21 March 2023. You can also see a higher level of transparency around overdue payments, as well as a breakdown of your payments that are in recovery and the recovered amounts.

Is the undertaken obligation of ID FINANCE in Spain and Mexico still valid to repay all delayed payments by the end of the month?

ID Finance has already substantially reduced its restructured payments and completed the agreements with two new investors. We remain confident that this is the best course of action, and that the lending company will be able to fully honor its obligations while investors will be compensated adequately.

The company has now completed two funding initiatives that allow the company to fully repay the restructured amount. However, the company is receiving the funding in tranches, hence the payment schedule will be amended to match the funding tranches:

  • ID Finance Spain has already started processing settlements in tranches. The company has to pay the remaining €3.6m by the end of April 2023. This means the final date for covering the restructured payments will be extended by one month.
  • ID Finance Mexico has experienced a delay in onboarding one of the new investors. As a result, the company has to transfer €150k in April, May, and June, and the remaining amount of €4.65m in July 2023. The final date for covering the restructured payments (31 July) remains the same as before.
  • The increased interest of 1.4 times the base interest rate on the outstanding restructured payments remains unchanged.

Why is the “buyback guarantee” not a guarantee?

The buyback obligation is a contractual obligation under which a lending company on Mintos is obliged to buy back the investment at the nominal value plus accrued interest in case the loan is more than 60 days late.

For the vast majority of cases, the buyback obligation works well, and investors receive back their funds for non-performing loans. It’s only when the issue spreads to the entire lending company that the buyback obligation cannot be exercised as planned. Investors can see the “buyback strength” subscore to evaluate the buyback provider’s ability to honor the buyback obligation. Learn more about it on the Mintos Risk Score page.

Read more about the buyback obligation

How much longer do I have to wait for money in recovery to be restored from the beginning of the COVID-19 crisis?

In each case where a lending company has missed a payment transfer, the reason for that is different. Therefore, there are also specific estimates regarding how much can be recovered from each case. There are a number of cases that have already been fully recovered. These include cases arising during COVID-19. There are ongoing cases where we still expect 100% recovery. Unfortunately, there will be cases where less than 100% is expected to be recovered. Please refer to summary of all cases, which includes estimates about how much and when the money will be recovered.

Why doesn’t Mintos mark the credit as failed if it’s clear that the company is not willing or able to pay it back?

In the majority of cases, the underlying issue is temporary. The issue typically gets resolved in a timely manner, and the payment goes back to normal without further complications. In rare cases, the underlying issue can be longer-lasting. While this means it might take a bit longer to recover investors’ money, our experience shows that often a significant percentage can be recovered. On the overdue page, you can see a breakdown of your payments that are in recovery and the recovered amounts.

Lending company-specific questions about funds in recovery

What is the plan for Wowwo recovery?

We will bring legal action against Wowwo in Turkey in order to recover investors’ funds. Currently, we are selecting litigation lawyers in Turkey, and we have already obtained 3 different offers. In April, we plan to meet the lawyers and move forward with one.

  • Country: Turkey 
  • Suspension: 21 December 2021
  • Principal exposure at suspension: €18 million
  • Recovered principal so far: €514 
  • Expected recovery: 75-100%
  • Timeline: TBD

What is the expectation of recovering funds from Fenchurch Legal?

At the moment, the recovery expectation is 100%.

  • Country: Great Britain
  • Suspension: 27 September 2022
  • Principal exposure at suspension: €9 million
  • Recovered principal so far: €1.2 million
  • Expected recovery: 100%
  • Timeline: 2024

Any news on Cashwagon PH or Cashwagon VT? How can the situation be handled faster?

The liquidation and recovery of the funds has been entrusted to an independent and reputable audit firm, CLA Global TS (formerly Nexia, a global top 10 audit and consultancy firm). Mintos will update investors once there is any progress with recovery of the funds. 

The only remaining valuable asset of the company is cash, which has been frozen in the company’s bank account as part of a local criminal investigation. The liquidator is still performing certain actions to unfreeze the funds, however, there is no estimate whether the funds will be unfrozen or what the timeline for finalizing the recovery process will be. If the funds are unfrozen, as priority the cash would be used to settle tax debts of the company, and any remaining amount would be distributed to the creditors. 

  • Country: Vietnam
  • Suspension: 6 June 2020
  • Principal exposure at suspension: €6.36 million
  • Recovered principal so far: €1.4 million
  • Expected recovery: 0-25%
  • Timeline: TBD

What is the expectation of recovering funds from Capital service? How could you speed up the payments?

At the moment, we expect that 100% of the funds from Capital Service will be recovered. The restructuring signed in 2021 aimed to start repayment to investors (according to the shared schedule), as well as to allow Capital Service to recover financially. The latter part is important because only if Capital Service is financially stable, there is potential to recover the full amount of exposure. Otherwise, the company would need to be liquidated and expected recoveries would be materially reduced. 

  • Country: Poland
  • Suspension: 6 April 2020
  • Principal exposure at suspension: €19.05 million
  • Recovered principal so far: €3.7 million
  • Expected recovery: 100%
  • Timeline: 2026 – 2028

It has been over 6 months since we received an update regarding Alexcredit. What is the current status, and what are the next steps?

Alexcredit defaulted long before the war started in Ukraine, and its portfolio was given to a debt collection company to be recovered. The debt collection company has some funds available in its account, but the transfer of the funds is currently delayed due to obstacles with the payments from this market. There have been no significant changes since May 2022 and currently, these activities have practically come to a standstill. With all the uncertainty around Ukraine, we have very low expectations of recovering anything significant for this exposure. Going forward, additional recoveries from the collection process are very uncertain, due to ongoing war in Ukraine.

  • Country: Ukraine
  • Suspension: 28 March 2020
  • Principal exposure at suspension: €4.42 million
  • Recovered principal so far: €165k
  • Expected recovery: 0-25%
  • Timeline: TBD

Why hasn’t the situation with ID Finance Mexico been dealt with Faster?

ID Finance and Mintos reached an agreement about restructuring the current pending payments. This approach offers the best chance of fully recovering the outstanding amounts. Updates with further details are included in the email sent to investors.

To compensate investors for rolling over their investments, the interest rate for pending payments has been increased to 1.4 times the original interest rate of the loan (on average 17.6%), which is significantly above the current market rate (average 13.8%).

  • Country: Mexico
  • Suspension: 29 July 2022
  • Principal exposure at suspension: €7.2 million
  • Recovered principal so far: €2.1 million
  • Expected recovery: 100%
  • Timeline: 2023

Thank you all for sharing your questions and helping us address what is most important to you when it comes to funds in recovery on Mintos.

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