A platform for private market assets, Yieldstreet will reimburse some of its legal expenses stemming from a problematic series of Marine loans, but their customers are less lucky. According to communications to clients, the company said it will get $5 million from a settlement with the borrowers who defaulted on these marine loans, in letters acquired by CNBC last week.
Despite this agreement, Yieldstreet stated that “far exceeds the total settlement amount” the expenses related to the recovery efforts; therefore, it is unlikely that investors will get any refunds. The corporation indicated that the agreements are almost finished and that financial reports showing losses will be turned in by February. Yieldstreet acknowledged in the investor letter, “We realize that this result is upsetting.” They also said, “Yieldstreet launched this extensive recovery effort because we are committed to investigating every available recovery solution for investors.”
A lawsuit against Yieldstreet in this project claims the firm had put its customers into agreements totaling $89 million in loans meant to be backed by 13 vessels. Businesses that take apart ships for scrap metal received financing from these loans, with the ships themselves acting as collateral for the deals. After ABP’s strategy to decarbonize the maritime industry, Yieldstreet went after the borrower, whom they charged with dishonest activities. Although the firm won financial awards in many countries other than the United States, the debtor avoided paying by concealing their assets as noted in Yieldstreet’s August investor letter.
This event drew media interest and helped to bring Yieldstreet’s famous collaboration with BlackRock, the biggest asset management company in the world, down in 2020. The disclosure of this latest loss follows a CNBC story from last month showing that Yieldstreet investors’ investments were. With around $300 million in other transactions now under investigation for possible losses, four real estate transactions totaling $78 million have been entirely lost.
