A tale of two invocations
Managing an invocation is high-pressure work that requires expertise, speed, and clarity. Having successfully managed two complex invocations in recent months, we explain the key steps to making the process as streamlined and effective as possible. Owain Chambers, Account Director for Capital Markets at FinTech leader Lenvi, reports.
An invocation – when back-up servicing replaces the original servicer – is a rare occurrence. But when it’s required, it can be very challenging. Whether initiated before or after insolvency, invocations require rapid action under pressure in often complex circumstances – and no two scenarios are ever the same. Technical expertise is clearly a must, but so too is flexibility, clear communication, collaborative skills and the ability to anticipate what could go wrong.
At Lenvi, we’ve had the benefit of developing our expertise in invocations through our brand heritage. This is a new FinTech business that brings together three parts of the Equiniti Group (Credit Services, Riskfactor and KYC Solutions) in a start-up setting to encourage truly ground-breaking innovation. So when it comes to invocations, we’re able to combine our knowledge and experience with market-leading technology. Indeed, we’ve recently delivered two invocations in very different scenarios. One was a German financial services business that had already been declared insolvent, the other was a niche company specialising in litigation finance, where the invocation was initiated prior to insolvency. We learnt a lot from these two projects and are happy to share some of the details of what was required.
Case study: A German finance provider
A company providing revenue-based finance products to German businesses had filed for bankruptcy. One of the big challenges here was that, with the company’s bank account closed, payments from borrowers had to be redirected to a new account. Extensive legal communication was also required within a very short space of time.
The solution - taking the data inhouse
We decided that this project would be better managed internally within Lenvi. That wouldn’t always be the case but the platform for the company’s finance products wasn’t required for the run-off and so, under the circumstances, it was quicker and more effective for us to take the data inhouse. We then redirected the recovery of payments to a new account. Key to this was our clear approach to servicing communication combined with comprehensive legal communication with the lawyers we worked with. The ability to collaborate and make effective decisions at speed is essential in these situations.
The result - operational on day seven
We overcame complex challenges and were operational within seven days of a 30-day process, which meant our client was able to communicate quickly and meet borrower needs. These strong communications, and reporting, were key to setting the redirection up and successfully agreeing processing for multiple investors.
Hear from our client
We support our clients from start to finish during an invocation. Through our tried and tested systems and processes clients know they are in safe hands and that their investment is safe.
We were impressed with Lenvi’s ability to hit the ground running and adapt quickly to changing circumstances. Throughout the 30-day invocation process, they provided us with reassurance that our investment was secure. The fact they were fully operational just a week after the start of the invocation process was impressive. Throughout the process, Lenvi’s first-class communication with ourselves and the borrowers was comprehensive and reassuring, allowing for the early identification of issues and swift solutions. The company’s in-depth expertise for the invocation process, together with their reliable platforms, make them a partner that can be trusted, and we look forward to working with Lenvi again.”
Invoked investor and Lenvi client
Case study: The litigation lender
A UK/Irish company specialising in providing litigation finance via legal companies was facing insolvency when its lead investor (an asset management company) asked us to initiate an invocation. This was a different challenge to the German scenario. Firstly, litigation finance is very much a niche product, far removed from standard product asset classes so, straightaway, there’s a steep learning curve. It's also a complex area in which the business was providing financial products for legal firms to sell to their customers, equating to more than 70,000 agreements in total.
The solution - no one size fits all
In this case, and with more than £50m at stake, we worked closely with the investor to determine that the continued use of the finance business’s technology, along with the retention of three key members of their staff, would be key to providing consistency, transparency and additional reassurance. This underlines the importance of flexibility – there is no ‘one size fits all’ template approach to invocations. And once again, clear, consistent and frequent communications between all parties, steered by Lenvi, was essential.
How was it for our client?
Our invoked investor and Lenvi client shared:
Having Lenvi by our side during this complex invocation meant we could be sure that our investment was safe. The project was planned meticulously and Lenvi’s expertise and knowledge of the invocation process cannot be faulted. We were operational in rapid time. Throughout the invocation their team clearly supported us and communicated the different stages of the process to ensure everyone understood their role and when key events were happening. We found them responsive and flexible to work with and look forward to more successful projects in the future.”
Invoked investor and Lenvi client
The result - stakeholder collaboration is key
At the time of writing, the project remains underway, moving forward on the back of our successful internal mobilisation. With everyone clearly aware of their roles and responsibilities, we’ve been able to act quickly and decisively in collaboration with all stakeholders. There will be more to emerge from this project so, as with the German example, do let me know if you would like to hear more about lessons learned.
The temperature gauge - delivery in 30 days
The ‘temperature gauge’ terminology in the world of invocations can be confusing with different parties working to varying time scales. At Lenvi we keep it simple and we keep it fast – our standard delivery time is 30 days. And just as important is the back-up service that we continue to provide afterwards. For instance, in the second case study, we’ve been contracted for a further 18 months post-invocation, to provide additional rigour and risk reassurance.
As the team here will testify, invocation work is challenging and intense, but if and when you need support for this, we can be there for you.
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