Print

[Urbi_et_Orbi]

Good.  Keep her busy communicating directly with a bunch of individual lenders.

 

[christoofar215]

...becoming subject to a bankruptcy or similar proceeding.

What proceedings are similar to bankruptcy?

A wind-down---which is what happens when a VC company that's mostly run off capital injections burns through all of its cash but isn't sitting on a mountain of debt (so outside creditors have claim to very little).   It's up to the VC partners then what to do.


AFAIK, Prosper didn't go out and borrow tons of money (because nobody would lend it to CL).   Prosper probably just has your run of the mill corporate small business debt but the loans are not part of that.   That's "committed cash" which just flows through Prosper but legally that money has to be distributed to lenders.

The VC injections are just that--injections by the "real" owners into the business.  They aren't creditors, either.   In a wind down CL would be stepping aside while the physical assets of the company are sold off (desks/chairs).   Prosper loses its office lease and then the platform has to be taken over by a custodian.   Because there's a bunch of different versions of the Lending Agreement floating around, it remains to be seen what realistically becomes of all the loans ex-post-bankrupt-o.I dunno, maybe I'm wrong.    There's the whole question of the secondary market as well.   Another big nightmare.

[Fred93]

AFAIK, Prosper didn't go out and borrow tons of money (because nobody would lend it to CL).   Prosper probably just has your run of the mill corporate small business debt but the loans are not part of that.   That's "committed cash" which just flows through Prosper but legally that money has to be distributed to lenders.

The quarterly report says there's $1.7M of liabilities (including accounts payable, long term debt, etc), and the most recent investment from  Nigel Morris took the form of a "bridge loan".  This loan is intended to be converted to stock when a bigger investor comes along.  However if no bigger investor comes along, then Morris' investment is a loan, and they would enter bankruptcy with $1.7M+$1M of liabilities in addition to the "notes" sold to the lender members.  

Of course that $1.7M number was as of Sept 30, 2009.  Might be higher now.

So yea, you're right, they didn't borrow "tons" of money, but they do have nontrivial liabilities.

[112233]

bridge to nowhere

[moremoneymarc]

What would be the "canary in the coal mine" first indicator of imminent disaster?  Would there just be a bk filing or would bank withdrawals cease without warning preceeding a bk?   is claw back of transferred money for a time period a concern?

[The_Cat]

What would be the "canary in the coal mine" first indicator of imminent disaster?  Would there just be a bk filing or would bank withdrawals cease without warning preceeding a bk?   is claw back of transferred money for a time period a concern?

Marc,

We have already seen canary indicators IMO. The actions to censor first adopters, the actions to purge any transparency. The whole SEC mess. The inflated return claims. Turnover at the senior leadership levels. I could go on but it is clear to me this is a company which could close at any moment without warning and I don't need to see the financials make this statement. The actions of the company appear increasingly desperate.

[onthefence]

What would be the "canary in the coal mine" first indicator of imminent disaster?  Would there just be a bk filing or would bank withdrawals cease without warning preceeding a bk?   is claw back of transferred money for a time period a concern?

Taking out loans using the lenders loans as collateral.

[Auream]

Bump... shouldn't there be another 10-Q filed by now? The last one was filed 4 months ago. I just hope these guys keep going for at least another 10 months or so... just long enough for me to get all my money out!

[Fred93]

Bump... shouldn't there be another 10-Q filed by now? The last one was filed 4 months ago.

No.  This time the form is 10-K rather than 10-Q, and the SEC gives 'em longer to file 10-K.  The due date is April 1st.   Because they are a simple small company, one would imagine that the accounting is easy, and the thing could easily be done early, but I'm thinking that they are gonna file at the last minute on principle.

[mothandrust]

The good news is, Prosper's management finally discovers that it has principles.

The bad news is, they are to vigorously oppose lenders and to procrastinate on filing financial statements.

[Xenon481]

I don't think it is principles; rather, it is them wanting to keep that information out of the public eye for as long as possible.

[ira01]

I don't think it is principles; rather, it is them wanting to keep that information out of the public eye for as long as possible.

+1.  I think that is virtually certain, because barring a last minute infusion of cash, it is probably going to show that Prosper is literally days from being broke. 

[Fred93]

I don't think it is principles; rather, it is them wanting to keep that information out of the public eye for as long as possible.

That was the principle I had in mind.

[christoofar215]

What would be the "canary in the coal mine" first indicator of imminent disaster?  Would there just be a bk filing or would bank withdrawals cease without warning preceeding a bk?   is claw back of transferred money for a time period a concern?

Taking out loans using the lenders loans as collateral.

I guess in the banking world that would be called a "shit sandwhich"


Fred do you have any guesses as to what the next timeframe might be when we'll have another episode of "The Great Prosper Solvency Crisis"?

[Fred93]

Fred do you have any guesses as to what the next timeframe might be when we'll have another episode of "The Great Prosper Solvency Crisis"?

As I understand SEC regulations, Prosper must file their annual report (form 10K) by April 1st.  Of course that will only tell us their financial condition at the end of December.