PeerStreet's Collapse in Numbers: What a $4.25 Billion Lending Platform's Bankruptcy Teaches Accredited Investors

PeerStreet, a real estate debt crowdfunding platform that raised money from Andreessen Horowitz and moved more than $6 billion in loan volume over its lifetime, filed for Chapter 11 bankruptcy in Delaware on June 26, 2023, leaving as many as 10,000 investors with capital frozen inside loans nobody was actively originating anymore (BusinessWire, June 27, 2023). Case number 23-10815. Assets and liabilities each listed in the $50 million to $100 million range. No fraud, no scandal, no headline villain. Just a marketplace lender that ran out of runway when rates moved and margins that were never fat to begin with went negative.

You put money into a platform like PeerStreet because it promised a version of the two things every private lender wants: current income and a paper trail. You bought fractional interests in individual bridge loans, or you bought into PeerStreet's pooled notes, and you collected interest while a professional underwriting team supposedly did the hard work of screening borrowers and servicing loans. For eight years that worked well enough to attract $4.25 billion in cumulative institutional and retail capital commitments. Then it didn't. This is what the numbers say happened, and what they should make you ask the next time a platform pitches you a similar deal.

The numbers: how PeerStreet built and then lost a lending business

PeerStreet launched in 2013, founded by Brew Johnson, and spent a decade positioning itself as the layer between everyday accredited investors and short-term real estate debt: fix-and-flip bridge loans, rental property loans, and similar paper originated by local hard-money lenders and then resold to investors in pieces. The company raised a $29.5 million Series B and, in 2019, a $60 million Series C led by Colchis Capital, with a16z, World Innovation Lab, and Thomvest Ventures also participating (Inman, June 28, 2023). Over its life, PeerStreet said it had arranged $4.25 billion in capital commitments and originated loans across all 50 states.

The wind-down started well before the bankruptcy filing became public. Inman reported that PeerStreet laid off 43 of its 64 employees in the days leading up to the Chapter 11 filing, essentially reducing the company to a skeleton crew managing a runoff book rather than a functioning lending platform. That detail matters: by the time investors read the bankruptcy headline, the company had already stopped being a going concern in any meaningful sense.

The Chapter 11 plan, filed and later confirmed in Delaware, did not sell PeerStreet's loan book to a third party at a discount, the outcome you'd expect from a distressed-asset fire sale. Instead, management of the mortgage run-off was handed to Colchis Capital, an existing large creditor and PeerStreet investor through an affiliate structure sometimes referenced in court filings as Pacific Creditors, per the Combined Disclosure Statement and Plan filed on PeerStreet's bankruptcy docket (Stretto bankruptcy docket, PeerStreet Chapter 11 case). In plain English: a creditor that was already owed money took over the job of collecting on the remaining loans and returning what it could to everyone else in line, including retail investors.

The plan became effective in mid-2024. What came back to investors after that is the part that should sting. According to PeerStreet's own bankruptcy investor updates, charge-offs on liquidated loans inside the MPDN note program (PeerStreet's pooled note structure) hit $22.2 million by 2025. The Pocket/RWN note series, a separate product line, took a 100% loss of $7.0 million. Interim distributions did flow back to some investors: $30.8 million to MPDN holders, $10.5 million to Pocket noteholders, $0.9 million to Portfolio note holders, and $4.9 million to OppFund II investors. Those numbers tell you two things at once. Some capital did come home. And some of it is gone for good, with the exact final recovery rate for most note series still not fully resolved years after the loans were originated.

Compare that timeline to what a normal bank failure looks like. When a bank fails, the FDIC typically has a buyer lined up over a single weekend, and insured depositors see their money within days. PeerStreet's structure offered no such backstop. Investors were unsecured creditors of a Delaware corporation in Chapter 11, and Chapter 11 timelines run on court calendars, not depositor expectations. The Federal Deposit Insurance Corporation's own resolution data shows how differently regulated depository failures resolve compared to unregulated fintech platform failures (FDIC failed bank list). PeerStreet investors did not have deposit insurance, did not have a resolution authority stepping in on day one, and did not have a guaranteed timeline. They had a claims process.

Jeff's take: this was a margin problem wearing a rate-shock costume

Here's what actually killed PeerStreet, and it has nothing to do with any single bad loan. A marketplace lender like PeerStreet makes money on the spread between what it charges borrowers and what it pays investors, minus servicing costs, minus loss reserves, minus the cost of running underwriting and compliance teams. That spread was never wide. Bridge and fix-and-flip loans typically carried gross yields in the low-to-mid teens. Investors on the platform were often getting high single digits to low double digits after fees. The room for error sat in a few hundred basis points.

Then the Fed raised rates seven times in 2022, taking the fed funds rate from near zero to over 4.25% by year-end, according to the Federal Reserve's own policy statements (Federal Reserve, open market operations history). Two things happened to PeerStreet at once. Borrower defaults rose as flip margins compressed and refinancing got more expensive, which is exactly when a platform needs strong servicing and workout capability. And PeerStreet's own funding costs and warehouse lines got more expensive at the same time its loan book was getting riskier. A thin-margin marketplace model has no cushion for that kind of two-sided squeeze. You either raise more capital to ride it out, or you don't. PeerStreet couldn't raise more capital in a market that had gone cold on fintech lenders generally, so it stopped originating and started shrinking, and eventually shrinking wasn't enough.

There's a structural point under this that every accredited investor should sit with. PeerStreet was a marketplace, not a balance-sheet lender in the fullest sense. It originated and sold loan participations to investors rather than holding the credit risk itself on a large capitalized balance sheet. That model works fine when origination volume is growing and loans are performing. It has almost no shock absorber when both volume and performance turn at once, because the platform's own equity capital cushion was always small relative to the loan volume flowing through it. You were closer to the credit risk than a bank depositor ever is, whether or not the marketing materials made that obvious.

Comparison: a messy bankruptcy versus a clean exit

PeerStreet isn't the only real estate debt marketplace that shut down. Kiavi, formerly LendingHome, wound down its retail Platform Notes program in October 2021, years before rates moved and while the company was still healthy. Kiavi didn't file for bankruptcy. It gave retail note holders notice, ran off the existing notes without loading in fresh losses from panic-selling loans, and pivoted entirely to institutional funding, later scaling to more than $30 billion in cumulative originations before being acquired by Figure Technology Solutions for $717 million (HousingWire). Same asset class, same basic business model at the outset. Wildly different ending for the people who trusted each platform with capital.

The difference wasn't luck. It was the decision, made years earlier, about how much capital cushion to keep, when to walk away from the retail funding model, and whether to be honest early about a strategy shift instead of hanging on until a bankruptcy court had to sort it out. A voluntary, orderly wind-down while a company is still solvent looks boring. A Chapter 11 with a multi-year claims process, charge-offs, and creditor committees is what happens when that decision gets made too late.

Platform	Exit type	Year	Investor outcome
PeerStreet	Chapter 11 bankruptcy, Delaware	2023 filing, plan effective 2024	Partial, staggered recoveries; some note series 100% loss; process still resolving years later
Kiavi (LendingHome)	Voluntary wind-down of retail notes, no bankruptcy	2021	Retail notes run off in place; company continued and scaled institutionally, later sold for $717M
Money360	Acquired by PGIM (institutional buyer)	2020	Platform absorbed into larger balance-sheet lender, not wound down
Groundfloor	Still operating as of 2026	N/A	SEC-qualified public offerings continue; no wind-down event to date

Red flags to check before you fund a real estate debt platform

You cannot predict a rate cycle. You can absolutely check the structural questions that determine whether a platform survives one. Ask these before you wire money, not after:

• Who actually owns the loan, legally, once you invest? Find out whether your investment is a true sale of a participation interest or a note that makes you an unsecured creditor of the platform itself. PeerStreet investors in note structures like MPDN were creditors in a bankruptcy estate, not direct loan owners, which is exactly why they had to wait for a court-supervised plan instead of collecting on collateral directly.
• What happens to servicing if the company disappears tomorrow? A credible platform has a backup servicer named in the loan documents, not a verbal promise. Ask for the name of that backup servicer and confirm it in the offering documents.
• How thin is the balance sheet relative to origination volume? A platform moving $4 billion in commitments on a balance sheet with under $100 million in assets, PeerStreet's own bankruptcy filing numbers, is a marketplace with almost no shock absorber. Ask for the ratio directly.
• Is the platform still originating, or just servicing a shrinking book? A sudden hiring freeze, layoffs, or a quiet halt in new deal flow is often the leading indicator, not the bankruptcy filing itself. PeerStreet cut two-thirds of its staff before the public filing.
• Does the platform disclose loss and charge-off data by note series, on an ongoing basis, not just in marketing recovery projections? If historical charge-off rates aren't published anywhere you can find without asking, that's a transparency gap, not an oversight.

Ask, too, about the platform's warehouse lines, the short-term credit facilities lenders use to fund loans before they're sold to investors. When a warehouse lender pulls back or tightens covenants, a platform can stop originating almost overnight, long before any public announcement. That is largely what analysts pointed to in PeerStreet's final year: origination volume cratered well before the bankruptcy filing became public, and by the time investors could see it in a press release, the decision had already been made months earlier. A platform that discloses its warehouse lender relationships and covenant terms, even in general terms, is giving you information most fintech lenders treat as confidential. Its willingness to share that is itself a signal worth weighing.

None of this means real estate debt crowdfunding is a bad asset class. It means the platform wrapping the loan matters as much as the loan itself, and in a rate cycle, the wrapper is usually what breaks first. The Securities and Exchange Commission's investor bulletins on crowdfunding platforms are a reasonable starting point if you want the regulator's own framing of these risks (SEC Office of Investor Education and Advocacy). Read the plan documents for any platform you're considering the way you'd read a term sheet: slowly, and looking for what isn't there.

Author Disclosure: Jeff Barnes, MBA has no personal position in any company, fund, or platform named in this article. Angel Investors Network has no current commercial relationship with any party mentioned. AIN provides marketing and education services, not investment advice. Past performance does not guarantee future results. All investments involve risk, including loss of principal.