Wowwo Q&A
This is a thread where you can ask your questions and write your Feedback about the Wowwo situation.
Dear Investors,
On December 17, 2021, we informed you that we made the decision to suspend loans originated by Wowwo from the Primary and Secondary Markets on Mintos until further notice.
The suspension is a cautionary measure to protect investor’s interests that is driven by macroeconomic changes which impact Turkish Lira exchange rate towards Euro. Given that Wowwo issues loans in Turkish Lira, but places them on Mintos in Euro, the company needs to pay the exchange rate difference from its own resources when forwarding borrower payments if Turkish Lira value drops.
As the Turkish Lira continued to depreciate rapidly, which could create a challenging environment for the company to meet its obligations towards investors on Mintos in a timely manner. We suspended Wowwo from the Primary and Secondary Markets.
Since then we shared also an update with you:
January 28, 2022
Dear Investors,
On Thursday, 27 January 2022, we had a meeting with Wowwo to further discuss possible solutions to the case of Wowwo's borrowers' repayments not being transferred to investors on Mintos. In the meantime, the funds due by Wowwo to Mintos and investors are moved to funds in recovery. The API communication system between Wowwo and Mintos was disconnected by the Turkish lending company due to currency risk that materialized for Wowwo as Lira continued to lose value against Euro.
In the most recent meeting, we exchanged information and proposals with the management of Wowwo, and we are planning to have a follow-up meeting next week when we will further discuss proposed options which will in the meantime be evaluated by both parties.
Mintos negotiations team is fully focused on coming to a resolution that will disrupt investors the least, as the case is currently classified “Stage 3”. You can find more about what this means in the article here:
https://www.mintos.com/blog/how-we-deal-with-loan-originator-issues-and-recovery-of-investor-funds/
As soon as we reach conclusions of value for investors and that can be publicly shared without disrupting our negotiation position, we won’t hesitate to update you immediately. In any case, we will share a more detailed follow-up after the upcoming meeting with Wowwo.
Please share your questions, thoughts and Feedback about Wowwo here.
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I think it would be very reasonable if Mintos takes like at least 25% skin in the game.
I think it was very misleading to give 15% exposure to Wowwo in a 'conservative' strategy. I took the 'conservative' strategy in exchange of a lower interest rate, but i was not aware i was investing in Turkish liras. There is nothing 'conservative' about that. And in my opinion there was a lack of transpiracy about the potential Risk.
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I agree that Mintos should put 25 % of 20 Meuros skin in the game.
It would be reasonable and put Mintos on the same position as the investors and thus makes the interest of Mintos and investors align.
I think there is a reasonable chance to get 100 % recovery. They can pay all their debts, they are just not willing to do so like I am not willing to pay my utility bills neither. But I simply have to do so, otherwise I would freeze and be on the streets.
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Dear Investors,
Thank you for your feedback.
Our business model is based on connecting investors looking to invest in loans on the one side, and lending companies that are looking to fund the loans they have issued to their borrowers on the other. In this way, our business is similar to how any financial exchange operates, be it for trading stocks, securities, commodities, derivatives, or other financial instruments. In our particular case, we currently offer claim rights for loan parts, and soon we will start offering regulated financial instruments called Notes.
As a platform operating in the form of a marketplace, we do not have direct participation in the investment opportunities offered on our platform (often called skin-in-the-game in the financial industry), unlike lending companies that issue loans to borrowers. Our main source of income is the commission we take from lending companies when they fund their originated loans through Mintos. When investors are unable to reinvest their funds, our business is affected as well. While it is not part of our business model to have a direct stake in the investments on our platform, rest assured that the interest of investors and Mintos are always aligned when it comes to recovering funds.
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Hello Lucja,
Thank you for commenting here.
When I joined Mintos, Mintos used to have 5 % skin in the game in every single loan issued on the platform. At some point, it was changed into the form that the LO has skin in the game. Basically meaning, LO can refinance 90-95 % of the loan.
Do you think Mintos would have been more careful with Wowwo if you had 5 % skin in the game also here like you used to have 5-7 years ago?
It is important to remember that as soon as this skin in the game was removed Mintos started to add LOs left and right and a lot of them defaulted during the flu era.
Indirectly, there is skin in the game when the commissions are lower when loans are not been paid in timely manner. However, Mintos can just launch a marketing campaign (cash back campaign) and attract easily more funds and move on.
Mintos should have actual skin in the game ie. being precisely in the same position with investors - being an investor into those loans themselves as well. Not just tell others to "keep money invested".
Even at smaller stake than 5 % would be better than nothing (say, 2.50 %).
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As a "financial exchange operator" you have failed on the only task you have, to ensure transaction security. I was guaranteed buyback after 60 days unless LO went into default. And for this you are definitely liable for
If i have to rely on the goodwill of the borrower to get my money back, i might as well deal with random strangers around midnight at the nearest gas station. I certainly dont need you
Since you have not complied with your own terms, a lawsuit is in order
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I don't see how Mintos having skin in the game or taking any other financial consequence of defaulting LO's is beneficial, it will only increase platform risk. If anything, I'd rather see another big party investing alongside the crowd with the same conditions and the same access to information.
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The main issue here is that Wowwo is not even defaulting.
They simply refused to repay their loans. They are acting like thieves.
Basically, this is not the type of risk the investors should take on Mintos. Defaults and bankruptcies sometimes happen but this should not be possible. After all, the investors are not even completely aware of what kind of contracts Mintos and a LO has. What ensures the repayments etc.
In my opinion, Mintos should cover 100 % Wowwo loans because this is not a risk on Mintos neglect... Therefore, better for Mintos to go for full force in this case and not accept less than 100 % recovery without bankruptcy.
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It certainly has the looks of it that Mintos acted too late. Particulary given the macro economic circumstances in Turky and the fact that Wowwo didn't hedge. The fact that Mintos should have acted before this escalated seems so obvious that indeed maybe there is something we don't know in the contract. At the same time any investor who does some due dillegence could have found out that the exchange rate was deteriorating and the hedging at least questionable. Of course nobody is going to do this. The average investor has a portfolio of 2500 euro and a small portion of that in Wowwo. It is not worth anyones time to do so hence the only practical solution is risk management from the platform, or at least provide decent disclosure and realistic risk ratings.
However I agree it with Mintos that going to court straight away might not be the best course of action. Perhaps they thought that their reputation with the other creditors and the threat of legal action was strong enough persuation. The effectiveness of legal action is all based on the assumption of effective rule of law. If the first thing you do is firing the big guns and then they don't work you won't have any other cards left to play.
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It is obvious you do not start with a law suit but try to refinance the loan in one big one and then they repay it on timely manner say 1 lump sum a month.
The legislation sucks pretty bad if it allows the thieves to steal. Very hard to imagine that this is the situation in Turkey.
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Thank you all for your comments and active participation. We follow the conversation, and we will provide you with more information on this as soon as it is available. In the meantime, we would like to invite you to participate in our next AMA (Ask Mintos Anything) meeting today, where our specialists will discuss the topics of recovery and take a closer look into what has been happening during the past three months. We’ll share more about the statuses of suspended and defaulted lending companies, and answer your questions about specific cases and recovery-related topics. More information in the link: https://www.mintos.com/blog/ask-mintos-anything-about-funds-in-recovery-april-2022/
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Hi Mintos,
Any updates on this? Has legal action been initiated towards Wowwo?0 -
Hello,
Okay I watched the QA from relevant parts.
They still keep speaking about not excluding legal actions against Wowwo.
I think better approach currently is to seek legal actions and not excluding repayment plan - exactly the opposite approach Mintos currently has.
There has to be bankcruptcy threat and legal actions also towards the management in personal level if possible. They clearly have money to repay - they just prefer not to repay.
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I agree withJaemo, but go a step further. Given what happened so far with Wowwo, will Mintos ever do business with Wowwo ever again? I hope not! So just go for aggressive legal acton! Being nice has no advantage at this point
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Dear all,
I'm writing this as Mintos lender and also investor ( Crowdcube).
We all now that is risk with this kind of investing, Neverthelles, it seems that in terms of legal framework there is room for improvement, by including the "Jurisdiction Clause" in the lender lender contracts.
Basically as clause that picks what is the court and law to be used in the case of a litigation and what is the law that will be applied to this contract. This is even more relevant in countries that the law system has issues.
Is understandable that for small companies and small volumes, this might not be usable, but for companies with low skin in the game and/or high lending volume, this really seems a must.
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Dear Investors,
on the 14th of April, we had In Recovery Ask Me anything session.
Please see the specific part here, where the Wowwo situation is explained in detail: https://www.youtube.com/watch?v=Mn0LOZKQr-8&t=2580s
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Hey all
i have like 800 € invested in wowwo and i have problems to understand why a company refuses to pay and getting away with it. is the legal action so slow?
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Dear Mintos representatives,
The session Recovery "Ask me Anything" did not provide confirmation that Mintos is taking legal action against Wowwo. Please inform the investors of Wowwo loans if legal action will be started or not, and by when.
Sincerely,
Daniel
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Dear Daniel Muniz Moreira,
We confirm that we have started working on the preparations for taking the legal route in the case of Wowwo. We will share more details in the regular Funds in recovery update that will be published per schedule - this Thursday, 5 May 2022
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Thank you for clear communication.
Indeed, we understand you do not get a good lawyer overnight. But it is important this step has been taken.
Keep us updated - when the heat starts to build up towards them - they might all of sudden start repayments if the heat is strong enough (including to possible personal responsibility). After all, it was a human being that decided not to honor the debt obligation even though there were clearly money to do so (ie. it is not an insolvency issue).
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Dear Mintos team, I just read in your update that you evaluated different options and took the decision to use Court of Arbitration of the Association of Latvian Commercial Banks against Wowwo. You state that risk evaluation and costs were the reason to go that way. I do think you should provide more detailed information to all investors why you think best is this way. Is arbitration not sth both parties need to be willing to accept? How do you expect probability that Wowwo will participate? What should be their interest to do so apart from offering again <100% recovery? Thanks upfront for providing more information
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Arbitration?
What the heck?
I think Mintos tried that route already since December, and still continues the same route.
In my opinion, Mintos should pay back all the money that it is unable to collect from the 20 million euros. This is something Mintos is screwing, not the investors.
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Something is really fishy here...
First Wowwo just deciding not to pay tells me they probably found a hole in the contract and decided to abuse it
Second, Mintos doing all this beating around the bush instead of just going full legal is confirming the above is probably true.1 -
Indeed, if Mintos does not collect money, the investors should start an investigation if there is some sort of conflict of interest between Wowwo and Mintos or why are not they protecting the investors like a regulated financial institution generally does?
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I do not understand what kind of hole in the contract there could be even for cases like these. It is obvious that they have borrowed money and everybody knows when you borrow you need to repay. In their cases they closed API and just refused to pay and now Mintos is considering to continue with similar strategy that has not worked during past 6 months.
I think this type of arbitration court that can enforce nothing to Turkey has very little power. Why do not Mintos go to regular courts?
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Yes - it is probably the best way to do the legal actions in Turkey because they can enforce the judgement over there. It is hard to enforce it from Latvia.
I heard in the QA about wowwo, that there is some beneficial owner of Wowwo that has plenty of other businesses as well.
I am interested in knowing from Mintos, what kind of leverage Mintos has in Latvian arbitration court? For instance, has the beneficial owner put his personal assets as a collateral against Wowwo loans?
I am curious to know what is the reason for using such court because it does not sound very relevant court hearing?
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That is my concern, too. Unless, the beneficial owner has his personal (sufficient) property to back up the loans in Latvia or the area this decree could be forced.
Mintos has not communicated at all the loan contracts and which kind of collaterals they have for cases like these.
I think Mintos should now organize a QA ASAP concerning this so that we can hear their arguments on this decision. 20 million euros is not a small amount of money.
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Dear colleagues,
After these few last weeks I was waiting for Mintos response to this major issue (not only 20 MEUR lost, but our confidence in this platform and their management), I would like to join some of you starting legal actions against Mintos, at an European scale. I am not confident enough to see my money back (all of us know that risks are high when someone is paying you back 10% profit), but at least we will be not totally fooled by Wowwo and Mintos. Latvia is what it is, and in terms of relevance and enforcement power, their arbitrary courts are at the same level as my 30-person neighbourhood block here in Madrid. Come on, let's be serious. Totally let down by Mintos, it is time to come into action, happy to join you in a combined legal action as some other German colleague suggested a few days ago. Best.
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Hello,
Could this German guy preparing legal actions against Mintos put his email here once again...?
BR
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This sounds very bad that the case is handled in arbitration court in Latvia.
There must be some sort of leverage/opportunity to force in Turkey in case Wowwo continues their game.
Bear in mind, we are expecting 100% recovery rate from a company that has functioning business.
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Dear Investors,
We indeed have analyzed all pluses and minuses of all options and found this the most suitable. We cannot disclose these considerations in more detail as it could give an advantage to Wowwo. Our incentives with investors are fully aligned, we also want to recover as much as possible.
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