Posted by The situation surrounding Mintos loan originator Nera Capital, an Irish lender specializing in litigation financing, continues to create uncertainty and concern. The reason for the delayed repayments is reportedly an ongoing review by the UK Solicitors Regulation Authority (SRA), which is assessing the solvency of around 80 law firms. According to Mintos, these law firms voluntarily suspended payments in order to not further weaken their solvency position. As a result, the UK law firms have not been paying interest since April, and according to Mintos, the repayment of principal is also likely to be delayed. At this stage, there is no confirmed timeline for when payments may resume.
It also remains unclear whether this is an industry-wide issue, as suggested by Nera Capital, or whether the investigations are specifically targeting the law firms financed by Nera Capital. A statement from litigation finance company Sandfield Capital, a loan originator listed on Income Marketplace, suggests that there are currently no risks to its own business model.
On a positive note: Mintos has not seen the need to suspend Nera Capital as a loan originator or classify it as being in default so far. However, if that were to happen, more than EUR 61 million of investor funds could be at risk, which would represent the largest loan originator default in the history of the marketplace.
For affected investors, the only option for the time being is trying to sell the loans on the secondary market. However, Nera Capital loans are currently not even in demand at a 30% discount, showcasing high uncertainty and limited confidence by investors in a positive outcome.