An invocation – when back-up servicing replaces the original servicer – is a rare occurrence. When it is required, it can be very challenging. Whether initiated before or after insolvency, invocations require rapid action under pressure and in often complex circumstances. 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.
Managing an invocation is high-pressure work that requires expertise, speed, and clarity. At Lenvi, our standby servicing experience is second to none. With a proven track record of successful invocations and over £35 billion in protected funds, we provide funders with the assurance that their investments are safeguarded. Our standby servicing team combines deep industry knowledge with Lenvi’s cutting-edge technology to deliver seamless solutions.
Having successfully managed three complex invocations, we explain the key steps to making the process as streamlined and effective as possible.
A German finance provider
The challenge
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.
A litigation lender
The challenge
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.
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.
How was it for our client?
Our invoked investor and Lenvi client shared:
An overnight invocation
The challenge
An invoice financer operating in Spain, France, and the UK unexpectedly filed for bankruptcy. They were due to receive an equity raise which fell through – triggering the invocation. This sudden development left no lead-up time, making it a rare and challenging situation for us, the investor and the servicers. Key complexities included cash flow and technology, however the primary complexity was managing the speed of the process as the client identified that they couldn’t sustain operations for the defined invocation plan, thereby necessitating a redefined 30-day invocation plan to one that could be delivered within 10 days.
The solution - leveraging in-house expertise
Considering the unexpected nature of the situation and our extensive expertise in the invoice finance asset class through our Riskfactor product, along with our existing access to the necessary data, we decided that the most prudent approach was to manage everything in-house rather than taking over their platform. Lending had already ceased for the portfolio, making it a static book to take the individual invoices from and allocate payments against. The team operated quickly to transfer everything over and communicate the change of service to all borrowers.
The result - speed and communication under pressure
Despite the challenges, the team successfully communicated with all borrowers within 10 days, managed the redirection of funds to a newly nominated account while navigating the complexities of the bankruptcy. Given the unique circumstances of this invocation, we learned significant lessons from this experience, which will help enhance future operations. The focus was on protecting the borrowers and ensuring smooth communication and fund redirection. Although it was a tough situation, the team managed to handle it effectively and learned valuable lessons for future scenarios.
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