Arnoud van den Bout, One-Law’s COO, has confirmed retrenchment letters were handed to all staff members as part of a “rightsizing” exercise, which would lead to job losses, but “the business will carry on as per usual, although in a smaller way than before, based on what the company can afford in terms of current turnover”.
Van den Bout said changes to the industry had forced a resize of the business as several banks were no longer using EAOs.
“Courts are finding it more difficult to obtain valid judgments, consumers are under stress and less able to afford EAOs,” he said.
A number of commentators have flagged potential fallout on Cambist from the business rescue of unsecured lender Bridge.
Last month, Bridge announced it had entered into business rescue proceedings owing to a lack of institutional funding. This was chiefly caused by risk aversion around the unsecured lending sector in South Africa after the failure of African Bank, it explained.
Approximately 1 200 individuals who had invested in Bridge and funded its lending activities have seen their returns reduced from as high as 19% to, in many cases, 12% – and as low as 6%. Investors will know in the next month or two what is to become of their capital.
OneLaw and Bridge had the same founder, Cornelius Aldum. Cambist began by selling Bridge debt.
This led to contentions that Bridge was granting loans using investors’ money.
This debt was later attached by OneLaw and sold to other investors (buyers) through Cambist at a discount.
However, Van den Bout maintains the group decided to “unbundle” about three or four years ago. The three entities that emerged independently from this unbundling were Bridge, OneLaw and an insurance broking firm, he explained.
No more EAOs
“Things at Bridge do not have an impact on us,” he said, responding to a question on whether Bridge’s business rescue was the reason for Cambist’s restructuring. Van den Bout said no new Bridge loans were currently being sold on the Cambist platform, but there could be individuals offering these loans for resale via the platform.
OneLaw facilitates the debt-collection process through EAOs for debt-collection attorneys. It launched the Cambist Online Platform in 2012, allowing members of the public to purchase these debt contracts at a discount and to receive up to 19.5% return per annum.
Van den Bout said Cambist was discussing stopping the sale of EAOs on its platform; the sale of “other matters”, such as cellphone and sales contracts, now accounted for a much larger share of contracts sold via the platform.