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MoolahSense Recovery Process (1)

MoolahSense aims to provide investors with opportunities to obtain high-yield returns by actively connecting them to SMEs who are seeking short-term business loans.   Missed loan payments happen from time to time, thus the importance of diversification.

We have in place a process to manage and seek recovery of late payments from Issuers and would like to share this with you.

Late Payments Recovery Process

MoolahSense has a strict collection workflow to ensure delinquent Issuers pays back their overdues. Below is a chronological order of activities that will take place from T+1 (Where T is the scheduled payment date)

From T+1 to T+30: Calling and messaging Issuer and Guarantors reminding them to make payment as well as highlighting to them the daily late interest accrual. Late interest rate of 30%p.a. will be charged on the overdue amounts beginning from the date of non-payment. The late interest charge is used to influence the Issuer in getting the Promissory Note payments back on track quickly and to discourage them from prioritising other creditors over their debt to the Promissory Note investors.

Formal Letters of Demand and Statutory Demand will also be issued to the Issuer and Guarantors if payments are not received within this period. A Statutory Demand is a warning letter (in the format prescribed under Bankruptcy Act) stating that if the Guarantors do not pay their debt under the Guarantees issued by them with respect to the Issuers’ Promissory Note, court proceedings can be commenced to make them bankrupt.

From T+31 onwards: We enlist the help of third-party professional debt collection agencies to recover the sums owed by the Issuer and Guarantor(s).  The fees of the debt collection agency will be borned by the Issuer.

At T+66 onwards: We will poll the investors for their consensus to pursue legal actions against the Issuer / Guarantor(s).

If we are notified that another creditor of the Issuer / Guarantors has filed a winding up application against the Issuer or a bankruptcy application against the Guarantors, they shall be placed on automated monitoring to enable us to be alerted on the final winding up / bankruptcy outcome.

If the winding up / bankruptcy application is concluded and the Issuer or Guarantor formally enters into winding up / bankruptcy, MoolahSense will file “proofs of debt” on behalf of the Promissory Note investors.  The filing of these “proofs of debt” means that the appointed administrator of the Issuer’s winding up / the Guarantors’ bankruptcy will be required to take into account the Promissory Note investors’ claims in any distributions of the Issuer’s / Guarantors’ assets.

What’s next?

In our next article, you will find out how we update you on the status of Issuers which are late on their payments and the outcomes of our recovery actions.

You may also want to know more about the meaning of the various statuses on your investment dashboard here.