Blog Detail

Blog Single Post

P2P Failure

CROWDFUNDING investors are likely on the hook for roughly S$ 600,000 in loans to a car parallel importer named TLC Cars that has failed to deliver on sold vehicles - and whose director is now uncontactable. Reports have been lodged against the company, and the police are probing the case.

An emailed investors' update from Capital Match, a peer-to-peer (P2P) investment platform, said that TLC Cars had borrowed substantial amounts of money in the last few months. Through Capital Match, TLC Cars had borrowed in late May from investors S$200,000, of which about S$100,000 has yet to be paid up. Capital Match and other peer-to-peer sites earn a fee by helping to matchmake small companies seeking short-term loans with investors. These loans usually offer very high interest rates - commonly more than 10 per cent per annum - reflecting the high risk and unsecured nature of the loan.

The platform said that it had failed to contact the borrower since late October for the six-month loan. The annual percentage rate for the loan stood at 19.2 per cent, and was backed by a personal guarantee by the director, Timothy Gay.

The platform had received a partial payment from the borrower on Oct 17, and had sent a demand letter for payment. It said that there has since been "terrible news" that Mr Gay might have "disappeared". "The director's whereabouts are unknown. His phone is off," said Capital Match, adding that TLC Cars' employees said that they have not been in contact with Mr Gay. "We have engaged a debt collection agency and are staying in touch with borrower employees and business partners to locate the director's whereabouts."

Mr Gay, who in May was living in a rented landed property in the Bukit Timah area, had vacated the place. The premise was, according to Capital Match, locked down by the landlord, apparently due to unpaid rent. The director had disclosed to investors in May that he was married. Now, Capital Match said that both his ex-wife and his girlfriend have told Capital Match staff they do not know where he is.

Capital Match confirmed the contents of the email sent to investors on Oct 31.

"We are not aware of any documents fraud on the side of borrower," said Pawel Kuznicki, director at Capital Match, noting that the borrower also has bank loans, which back "the integrity of information".

Capital Match said that TLC Cars had also borrowed some S$1.5 million from financial institutions. The company might also owe private creditors money.

TLC Cars had further borrowed S$500,000 from another major, but unnamed, crowdfunding platform. And it still owes about S$30,000 to investors who invested through credit marketplace Funding Societies. The total loans amount was S$100,000, funded in January this year. Investors have received S$66,500 in repayments to date.

"Like other platforms, we're pursuing collections hard but with limited results," said Kelvin Teo, co-founder of Funding Societies.

BT understands that the platform with the biggest half-a-million loan exposure is among the top five online platforms here. MoolahSense said that it had not funded TLC Cars. New Union did not respond to queries by 7pm.

This comes as TLC Cars reportedly failed to deliver vehicles on which deposits have been paid. "Reports have been lodged, and the police are looking into the matter," a spokesman from the Commercial Affairs Department told BT.

Calls by BT to TLC Cars on Friday were unanswered. The car parallel importer's office is at Turf City, off Bukit Timah Road. In an online advertisement, TLC boasted of its "top quality, trusted service and thorough passion".

The Straits Times reported that Mr Gay of TLC Cars could not be contacted, either.

According to the information provided by Capital Match, TLC Cars was set up in January 2015. It posted a net profit of S$873,000 for the six months ended Dec 31, 2015, with an operating margin of 8 per cent. Total debt translated to about 75 per cent of assets for that period. Its credit rating meant the implied odds of a default were at up to 8 per cent.