Funding Circle breaches securitization limit as it switches from servicer to sponsor
Funding Circle has breached the terms of its securitization SBOLT 2018–1 — a book of loans originated on the platform and was bought by Pollen Street Capital’s P2P Global fund. The breach was driven by a shift in the company’s business model from a pure tech platform to a non-bank lender using its own capital. Funding Circle has asked investors to waive the breach.
SBOLT 2018–1 contained a “liquidity covenant”, specifying that Funding Circle could be replaced as a servicer if it breached “burn rate” limits.This required Funding Circle to limit the amount of its cash outflows in a specified time period. But the limit was set before Funding Circle floated and ...
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