Earlier this month, Latvia-based peer to peer lender Grupeer announced it was pausing operations due to the COVID-19 pandemic.
In a blog post, Grupeer founder Alla Kiska stated said that the Coronavirus had compelled the platform to halt operations as before and told investors “hereby [we] notify you that all payments to investors of Grupeer are currently suspended due to [an] emergency state declared in European Union and worldwide regarding COVID-19 pandemic crises.”
Investors were understandably concerned.
A followup blog post by Kiska pleaded with investors not to go direct to borrowers in pursuit of money :
“We have been receiving notices from loan originators that they have been contacted directly by a considerable number of investors urging not to repay the outstanding funds to us, but directly to them. These uncoordinated activities have caused understandable concerns for several loan originators. Some, in our view, in bad faith have notified us that because of the investors’ activity they are completely suspending all repayments to us. If our loan originators do not honor their commitments, we cannot fulfil ours.”
This week, Grupeer distributed a release indicating the company has formed a plan for “stabilizing the situation.”
Grupeer said the plan will take one to two years asking investors to “remain calm and not panic, as that only makes the situation worse.” Reportedly, the goal is to eventually “satisfy investor needs.”
To quote Grupeer:
“Grupeer is a P2P investment platform that operates as the intermediary between lenders, who require working capital and private investors, who can gain a profit from their invested capital. The platform has always worked to ensure investment security, applying the best practices in the P2P industry, including buyback guarantees. The global economic crisis caused by the Covid-19 pandemic has hit the P2P investment industry especially hard. The financial hardships of borrowers together with governmental measures have created a delay in paying back loans and limited creditor rights to recover debts. In some countries a moratorium period has been applied to loans, in others creditors are forced to extend debt repayments, in others to refrain from initiating legal proceedings against debtors, etc.”
Grupeer said the financial crisis, caused by the Coronavirus, has affected individuals, entrepreneurs, and businesses. The company urged investors “not to lose trust in the platform’s continued operations and the safety of their investments.”
The P2P lender assured impacted individuals that the company is working on solutions and is seeking to promote the platform’s investors’ interests.
A Telegram group, with over 3000 members, has been launched by impacted Grupeer investors. Some participating individuals appear to be interested in pursuing legal action in regards to the pause in payments.
Grupeer is not alone in its struggles. Around the world, some SME lenders have simply stopped issuing credit due to the crisis. While many consumer lenders continue to offer credit, all platforms are revisiting credit risk as concern has risen regarding a heightened default rate. Some industry insiders have shared predictions that not all online lenders will survive a health issue that has quickly morphed into a global economic crisis.