Brent has left PWCC

[Exhibitman]

Lots of the biggest modern cards fell like stones last year, whether it was the end of a frenzy, steroids, injuries or just poor performance. The 1986 Fleer MJ RC PSA 10 was a $700K card for a minute 2+ years ago and has settled back down to a pre-pandemic sub $200K range. If you loan 50% on a card and the card drops 70%+, you are at a loss, especially if you use either recourse financing or entered into specific debt covenants to get the cash to lend out, if your lending decisions were injudicious, and if you offered non-recourse loans to the card owners. My guess is that some combo of those factors was in play. PWCC may not have been insolvent but it could easily have run afoul of loan covenants that would allow the lenders to take control and force a sale. Maybe don't get greedy and stay in your lane, and definitely don't bet your company on a fickle market.



PWCC wouldn't be the first lender to get killed by collateral declining in value. Look at the commercial real estate market. Many banks are playing 'pretend and extend' for zombie commercial real estate loans right now; they know the values of their collateral have tanked. Office building owners in SF and NY and other major cities where remote working has taken root are handing keys to lenders and walking away from hundreds of millions in investments. I'm involved with one such scenario right now where my clients are waiting to see if the borrower defaults in October when the next installment payment comes due.