How do we proceed in the recovery of problem projects?

We are in constant contact with our partner and are looking for effective solutions. However, sometimes it may happen that we do not find a suitable way out which, according to our assessment, would ensure a high probability of return of principal and payment of interest to investors. So we have no choice but to recover the loan.

Before the project reaches recovery status, we evaluate all indicators that would indicate that the partner will not be able to live up to its obligations. As a rule, this will mean that the project is already more than 90 days overdue or it is very unlikely that the partner will meet its loan obligations. Each case in which we experience a repayment problem will be evaluated individually by our credit committee who, after considering all the circumstances and risks, will decide whether to move the project into recovery or allow the partner to extend the loan. An extension could occur, for example, in a case where repayment depends on the sale of residential units, and it is very likely that sales will take place in the following months. In such a case, investors' invested funds would continue to be valued at contractual interest throughout the extension period.

First a challenge, then we apply a lien

The safety and risk minimization of our investors is a top priority for us. That is why we use several levels of security for all projects on Investown to protect investors' money as best as possible in the event of recovery.

Enforcement proceedings are not a pleasant process, but we are well prepared for this situation as well. Each case is individual and our legal department, together with the law firm, always tries to choose the best possible course of action so that our investors get their money as soon as possible.

If the partner is in default on the payment of principal or interest, we proceed as follows:

1. We send a call to the guarantorswho, by default, have 10 days to pay the entire obligation.

2. We send to the Land Registry and to the partner notice of commencement of enforcement of the lien, while we can proceed to its performance only after 30 days.

The further procedure depends on the method of securing a particular project.

Project with notarization

In the event that a notarial deed with direct enforceability is signed for a given project, we will send a motion to the bailiff to initiate enforcement. The administration associated with the initiation of execution lasts about 1 month.

After examining the proposal, the bailiff commandeers the property of the guarantors and orders a public auction, at which the collateral will be monetized and the proceeds distributed to the creditors. This whole process can take 6—8 months. However, since we are always 1st in the ranking for collateral, we get paid 100%, or most of the amount owed, which we will then distribute in proper proportion to investors.

Project without notarization

If the project has not been signed notarized with direct enforceability, we cannot submit the application for execution directly to the executor. Therefore, we are sending the application for the judicial sale of the pledge to the competent district court.

The processing of the court application takes about 6-12 months, in worse cases, when there is an appeal, the duration of the proceedings may extend for another 6 months. Once the court decision is final, it is again handed over to the competent bailiff, who will order the auction.

When the partner is bankrupt (insolvency)

In the event of the bankruptcy of the partner, we file an insolvency petition with the court, which will review the case and decide on the bankruptcy and the way to resolve it, which can take approximately 1 month. Once bankruptcy is declared, creditors have 2 months to file claims. An insolvency administrator is appointed to the partner, who compiles an inventory of the debtor's assets, reviews applications for insolvency proceedings and, in certain cases, acts on behalf of the debtor.

In the case of insolvency for the court, resolution by bankruptcy or reorganization shall be considered in particular. What does that mean?

Audition

On the basis of the ordered sale, creditors are fairly satisfied, from this amount we pay our investors. Thanks to the lien on real estate, we are in the group of secured creditors, which favors our position. The process can take several months, but also years. The most common duration is between 2-3 years.

Reorganization

This is the start-up of a business without forced sale, the receivables are repaid by recovering the debtor's business. From bankruptcy, it can take up to 6 months before the reorganization plan is approved and the debtor's reorganization itself begins. With the repayment of receivables according to the reorganization plan, the reorganization and reorganization proceedings end.

Frequently Asked Questions

How do I get up-to-date information about the progress of a project in the state of enforcement?

As before, we will add updates to the detailed pages of the recovered projects every 14 days. At the same time, we will inform you of the current status by email.

Will I continue to receive returns in the event of recovery?

Solutions in the form of execution

Yes, contractual interest and statutory default interest continue to run all the time. At the same time, the contractual penalty will also increase.

For projects with signed contractual documentation until June 17, 2025, the contractual penalty is 0.2% of the amount owed per day for each day of delay. For projects with documentation signed from June 18, 2025, the contractual penalty is set as follows: 0.1% of the amount owed per day for the first 30 days of delay, then 0.05% per day.

Solution in the form of insolvency

As soon as we initiate recovery, contractual interest, statutory default interest and contractual penalty are charged (pending the court's decision on the debtor's bankruptcy).

The contractual penalty is 0.2% per day of the amount owed for projects with signed contractual documentation until 17 June 2025. For projects with documentation signed from June 18, 2025, the contractual penalty is set as follows: 0.1% of the amount owed per day for the first 30 days of delay, then 0.05% per day.

After that, only the contractual interest runs until full repayment.

Can there be a situation where you will not be able to recover any money?

Yes, it could happen that no one enters the auction and does not manage to monetize the collateral, or the guarantors become non-creditworthy during the course of the loan relationship. Even in such cases, we will try to enforce the commitment as long as the law allows us to do so.

Does the recovery relate to all tranches and stages?

Recovery always applies to all capitalized stages and tranches that are past due.

If we start collecting receivables, for example, on a tranche project where 2 tranches have already been withdrawn and the 3rd is yet to be withdrawn, we will send the funds already withdrawn from the open stages to the investors back to Investown wallets and pay off the previous 2 tranches.