Credit Chronometer

MARKETPLACE LENDING

Marketplace lending, in the broadest sense including peer-to-peer and online lending, continues to be shaped by advances in fintech, regulatory uncertainty and major legal decisions regarding “true lender,” “valid when made” concepts and the application of usury laws. A technologically savvy consumer base creates the potential for marketplace lenders to outperform their traditional counterparts and their successes are providing lessons to be learned by traditional lenders. The Credit Chronometer offers analysis and advice for avoiding the pitfalls that have historically led to shorter growth cycles and battles over loss distribution.

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ABOUT THE AUTHOR

Joseph Cioffi is a partner at Davis & Gilbert in New York City where he is Chair of the Insolvency, Creditors’ Rights & Financial Products Practice Group, a multidisciplinary practice spanning corporate, insolvency and litigation. He has a unique perspective afforded by his experience in all stages of credit and market cycles, including in subprime lending investments, operations and litigation. Joseph and his group have been deeply involved in disputes and litigation resulting from the last financial crisis. He has written for or has been quoted by numerous publications, including American Banker, Law360, Asset Securitization Reporter, The Banking Law Journal, The Journal of Bankruptcy Law and Auto Finance News, regarding auto loans, student loans, marketplace lending, subprime residential mortgage-backed securities (RMBS) and environmental, social and governance (ESG) investing.

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Read Joseph’s recent article in the Consumer Financial Services Law Report discussing how subprime RMBS could serve as a guide for subprime auto litigation.

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ABOUT THE INSOLVENCY, CREDITORS’ RIGHTS & FINANCIAL PRODUCTS GROUP

Davis & Gilbert’s Insolvency, Creditors’ Rights & Financial Products Practice Group represents clients in a broad range of corporate, insolvency and litigation matters. The group has been actively involved in many of the most notable and highly visible business events in recent years related to the last economic downturn and has vast experience in the area of subprime lending, including the operation of origination platforms, relationships with servicers and defending large-scale asset-backed securities litigation. The broad and diverse experience of their attorneys makes them particularly well-equipped to advise clients in rapidly evolving markets, such as, those for auto loans, student loans, marketplace lending, mortgage loans and environmental, social and governance (ESG) investing. Additional highlights of the practice include the following:

Litigation: The group regularly prosecutes and defends litigation involving complex financial transactions and instruments and has defended residential mortgage-backed (RMBS) securitization litigation, including fraud and repurchase claims, involving nearly $2 billion in claims.

Bankruptcy: The group guides clients through financially distressed situations and helps formulate and execute creditor enforcement strategies, in particular, in the case of intermediaries facing obligations to third parties. The group has defended nearly $1 billion in fraudulent transfer claims brought by the trustee for the liquidation of Bernard L. Madoff Investment Securities LLC.

Corporate: The group also advises on a full range of financing transactions, including secured revolving and term credit facilities, receivable financing arrangements, intercreditor agreements, warehouse lending facilities and loan purchase agreements.

For more information about the Insolvency, Creditors’ Rights & Financial Products Practice Group, click here.

Marketplace Lending

Law360.com, “Madden Creates More Uncertainty for Marketplace Lenders”

Mar 23, 2017 | By JOSEPH CIOFFI AND MASSIMO GIUGLIANO

In "Madden Creates More Uncertainty for Marketplace Lenders,"" a Law360 article, Joseph Cioffi and Massimo Giugliano discuss the ongoing case of Madden v. Midland Funding and its impact on the marketplace lending. The authors explain the significance of the initial decision by the Second Circuit in 2015, which created substantial risk for marketplace lenders that rely on a partner bank origination model to avoid state usury caps, and analyze the potential impact of a subsequent decision striking down a choice of law clause often relied on by lenders to guard against usury claims. The consequences of the decision – both intended and perhaps unintended by the court – are considered from several angles, including from the perspective of investors in securities backed by marketplace loans. To read the full article, click here.

About Co-Author

Massimo Giugliano is an associate in the Insolvency, Creditors’ Rights & Financial Products Practice Group of Davis & Gilbert. Massimo advises financial institutions and service sector businesses in connection with a broad range of insolvency-related matters and credit transactions.