Viventor Update

This morning I received below email from Viventor:

We are pleased to announce that the acquisition of Twinero & Presto by Gielen Group is now final and investors are given 2 recovery options.As we informed you last year, the following three scenarios would be evaluated:1. Sell the troubled loan portfolios of Twinero and Presto to a third party at a discount.2. Gain control of the outstanding portfolios of Twinero and Presto and engage in outstanding debt recovery.3. Incorporate Twinero and Presto into Gielen Group.After carefully evaluating the above 3 options it was decided the best option would be to incorporate the Twinero/Presto companies.Choosing this option meant that a bankruptcy or unwinding of Twinero/Presto, with 30 employees, could be avoided. In the current Spanish market this is the best outcome as both bankruptcy and unwinding would have resulted in complete loss of investor funds due to the cost involved in unwinding the company and the selling/unwinding of the debt portfolios.
On April 2nd and April 19th, we informed you that the outstanding debt needed to be restructured to finalize the deal. ViVentor represented investors during these discussions and negotiated that investors would be given a choice. The deal is now final and Investors in Twinero and/or Presto Claim-Rights are offered the following two recovery and settlement options:1. Default option – Guaranteed Buyback of the Right to Claim at a price of 20%*of the invested principal amount settled within 30 days after this announcement.2. Opt-out option – Unguaranteed Buyback of the Right to Claim at a price of 100%*of the invested principal amount, spread over a period of 5 years according to the following settlement schedule:

a. 7,5% within one year from the date of this announcement

b. 7,5% after two years from the date of this announcement

c. 7,5% after three years from the date of this announcement

d. 7,5% after four years from the date of this announcement

e. 70% after five years from the date of this announcement

In case you prefer the guaranteed buyback at a price of 20% of your invested principal, you can either reconfirm this by logging in to your account or simply do nothing and wait for settlement. In case you prefer the opt-out option, please log in to your account, within the next 5 business days, to register your choice. Your current assignment agreement will be replaced by a new agreement stating the buyback price, conditions, and payment schedule. Full details of the “Agreement on Buyback Price Payment Schedule” can be reviewed online.

When I saw the 20% buyback price my jaw almost dropped…little I knew the surprises where not done yet. The 20% in fact comes with an ‘*’, which means Viventor is holding half of that 20% for itself; I will not even try to give a precise definition to that ‘*’ because as of now everything about Viventor is purely ‘make-believe’.

The two choices are an insult to anyone that has opposable thumbs. If the guaranteed buy-back is just 10% of your investment, i.e. almost 0, I think anyone will try the gamble of the unguaranteed option: the higher the distance between the certain amount and the uncertain one, the more people have an incentive to try their luck. It is a simple game theory. The reality is that Viventor wants to give you the impression that you have a choice, while the reality is different. Once I logged in to express my preference, a pop-up window opened on my screen: the guaranteed loss was highlighted in bold and yellow while the unguaranteed loss was assigned to a smaller, less relevant button.

How can Viventor deceive now users that can read? Well, once I moved my mouse on my preferred choice, the window MOVED and put the other choice under it! Five seconds later, the window was gone and I was logged-out automatically. Once I got back in, no more window, no more choice. It was like one of those stupid pop-up you get when you try to stream a Champions League game on those Russian website…the only difference is that Viventor is supposed to be a bit more legit. I wrote a message on their chat but given the circumstances I do not think I will receive any reply back (yes, it looks like a chat but they say it will take one day to get a reply).

Obviously at this stage there is no point of trying to rationalise how big credit losses are for this type of consumer loans and their recovery rate, it is clear that everything related to Viventor is a scam. I imagine their legal team will use ‘my choice’ as proof that I agreed with their proposition…I mean, you cannot even wait because if you do not log in, then they will take a decision for you. Because this is what it is: a vesture to protect them from lawsuits. Technically, with this email and their pop-up, they did not run away with the money like Kuetzal and the others, they gave you a choice, for 5 days, and you took it. The options, the 20% minus the fee included in their contract, everything is there so that they can show to a judge that they are legit and, unfortunately, sometimes investments go wrong.

And believe me, I know that shit happens. My rant is not about an investment that went wrong, is about the fact that Viventor thinks I am a fool that does not realise what is going on. Unfortunately this is only the hors d’oeuvre, because Twinero and Presto were small LO on Viventor; the main plate full of s**t, given the premise, will be Atlantis Financiers.

Brian Portnoy recently tweeted about Charley Ellis’ thesis of winning by not losing, as described in the book Winning the Loser’s Game. As I described in my previous post, my strategy of cashing 50% of gains out of each p2p platform is me trying to apply the same concept. The sad truth is that gains are not gains if a platform goes bust. Winning by not losing means that the 30% of initial investment I took out from Viventor in the past is not a drag on compounding, it was my saving rope in case this situation happened. Considering a 90% haircut on my Atlantis outstanding balance, I will conclude my Viventor experience with ‘only’ a 60% loss, or 0,4% of my total investments.

Going forward, I will keep the exposure to each p2p platform capped at 1% of my total investments. This means that for those platforms that grow at a faster rate than my portfolio, I will divert more than 50% of their gains away.

And let’s hope I will not have to write too many updates like this one in the future 😉

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