Notes offered through Funding Societies are unsecured, which means that they are issued and supported only by the SME's creditworthiness, rather than with assets as collateral.

However, this doesn't mean that you have no recourse as an investor.

Personal Guarantors

All directors of the company are required to provide personal guarantees on the notes. In the event of non-payment from the company, the personal guarantors are still liable to repay the note in their personal capacities. 

Corporate Guarantee

On certain notes, such as where the SME is a listed company, a corporate guarantee by the parent company or other company related to the SME is offered in place of the personal guarantee. In this case, the company providing the corporate guarantee will be liable to pay in the event of non-payment on the note. 

Executing Your Recourse

If an SME misses a repayment, and no other methods of recovery are successful, we may recommend to all investors who had contributed to the note to start the legal process to execute the recourse, which we will execute on behalf of all investors.

The legal process could include issuing a Letter of Demand (LOD), Writ of Summons (WOS), Statutory Demand (SD), Bankruptcy Petition (BP), Enforcement Proceedings, Writ of Seizure and Sale (WSS) and Company Winding Up Proceedings depending on the SME's situation and cooperation in the process. 

Funding for Legal Recourse

Contributions made by Investors to fund any legal recourse is purely on a voluntary basis. The legal fees will vary from case to case, depending on the complexity. The actual figure will be shared with all Investors who had participated in the note before we raise the funds.

If we are unable to raise the full amount required, no legal recourse or actions will be able to be taken.

Upon successful recovery of any amount via the legal proceedings, the payments will be distributed in the following order:

  1. Legal Fees (those that contributed only)
  2. Principal Invested
  3. Interest
  4. Late Interest

If the sum collected from the legal recourse does not cover the full amount for the above, repayments will first go to the Investors that contributed to the legal fees before any balance gets distributed to those that did not.

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