Run-off management: definition, obligations and stakes
Run-off management addresses a simple but essential question in crowdfunding: what happens to projects and investors if a platform shuts down?
This topic has gained prominence alongside the progressive structuring of the market and its regulation at the European level. Regulation (EU) 2020/1503 on European Crowdfunding Service Providers for business (ECSPR), which came into effect in November 2023, requires platforms to formalise their organisation, governance and risk management arrangements.
Among these requirements lies a central obligation: the implementation of a business continuity plan (BCP).
In practice, each platform must be able to anticipate its own failure and demonstrate its capacity to ensure the continuity of ongoing operations, regardless of the cause of the shutdown. This requirement aims to guarantee the continuity of what the regulation qualifies as essential services.
These services include:
- Continuity of cash flow management between project owners and investors
- Proper administration of existing contracts
- Transparent and ongoing information disclosure to investors
- Where applicable, implementation of recovery procedures
In practice, this means that operations must be able to continue without interruption: payment schedules must continue to be managed, repayments made, investors must retain access to their information and documents, and data must remain accessible and transferable.
Run-off management (sometimes referred to as wind-down management) refers precisely to the set of arrangements that ensure this continuity. It is not a theoretical scenario but a structural component of the crowdfunding platform model, designed to guarantee investor protection until the completion of all projects.
Why run-off management has become a pressing issue
The crowdfunding market has reached a turning point. After more than a decade of growth, it is entering a maturity phase marked by several converging dynamics.
The sector is first experiencing a pronounced consolidation. The number of active platforms in Europe is declining, driven by mergers, repositioning and outright shutdowns. Across the EU, several established players in real estate crowdfunding and crowdlending have ceased operations over the past two years, sometimes with tens of millions of euros in outstanding loans and thousands of investors to manage. This is no longer a marginal phenomenon: it now shapes the overall reading of the market.
This consolidation is occurring against an unfavourable macroeconomic backdrop. The interest rate hikes that began in 2022 have tightened financing conditions, particularly in real estate, and put pressure on the profitability of many projects. Defaults are multiplying, extending the average portfolio duration, and making a platform's run-off far more complex to organise than it would have been a few years earlier.
Added to this is a regulatory requirement that is progressively taking hold. Since November 2023, national competent authorities (NCAs) across Europe have been effectively monitoring the robustness of CSP business continuity plans. This is no longer a theoretical document filed away in a licensing dossier: it is an operational mechanism whose viability the platform must demonstrate. The latest regulatory guidance from ESMA further underlines that the BCP must be operational from the moment the run-off management contract is signed, not only when it would be triggered.
A final factor: investor expectations have risen considerably. The general public has come to understand, sometimes at their own expense, that crowdfunding carries risks. European regulators have called on investors to exercise the greatest vigilance regarding the risks incurred in the event of a platform ceasing operations. A platform's ability to explain what will happen in the event of a shutdown has become a trust criterion, on a par with the quality of project sourcing or transparency on past performance.
What run-off management means for each stakeholder
Run-off management is not an administrative formality: it is a mechanism that simultaneously engages three parties, each with their own expectations and obligations.
For investors, run-off management must guarantee seamless continuity. Permanent access to their personal dashboard, visibility on the schedule of each project, receipt of repayments via an operational e-wallet, availability of tax documents, and regular updates on project progress. An investor must never find themselves facing a ghost platform: their contractual rights survive the commercial closure of the operator.
For project owners, contractual obligations do not expire with the platform. Payment schedules remain due, contracts remain enforceable, and counterparts must be identifiable without ambiguity. Proper run-off management allows them to continue honouring their commitments within a clear framework, with active communication channels and rigorous payment monitoring.
For distributors — wealth managers, family offices, investment advisors — who have presented projects to their clients, run-off management must preserve the quality of the monitoring they have undertaken. This requires consolidated access to their clients' subscriptions, their schedules and project updates, enabling them to continue fulfilling their duty of advice and reporting to their clients throughout the run-off phase.
For the platform itself, the switch to run-off management is not an endpoint but a transition. As long as the legal entity exists, it remains a stakeholder in the process: transmitting up-to-date data, responding to the technical manager's requests, and coordinating with the investor representative. Well-prepared run-off management smooths this phase and preserves the trust built with investors, project owners and partners throughout the platform's active life.
A mechanism that mobilises several actors
Run-off management is generally not the responsibility of a single provider. It relies on an ecosystem of participants whose composition depends directly on the type of financing offered by the platform: interest-bearing loans, plain or convertible bonds, shares, social shares, participative securities, royalties. Each instrument calls for a tailored arrangement, and certain typologies — particularly bond issues — mobilise all of these actors in a coordinated manner.
The technical manager ensures operational continuity: data hosting, cash flow management via the payment service provider, maintaining access for all stakeholders, generating tax documents, monitoring schedules, and archiving. This is the foundation on which the entire mechanism rests, regardless of the instrument involved. Its role is strictly technical and administrative: it does not intervene in project governance or in investors' collective decisions.
The investor representative carries the collective voice of a project's investors. In the case of bond issues, this takes the form of a bondholders' representative as provided for by applicable national commercial law. In the case of equity investments or those made through special purpose vehicles, this may be the company officer of a project company or a contractually appointed representative. Their role becomes central when situations deteriorate: negotiating with the project owner, collective decisions at general meetings, and mandating recovery service providers when amicable or legal proceedings become necessary.
Recovery service providers intervene precisely in this context, when projects deteriorate. Contentious recovery falls outside the platform's regulatory obligations, as European regulators have reiterated, but it is an integral part of a comprehensive run-off arrangement whenever the instrument requires it. It is the investor representative who mandates these providers and oversees their intervention, in coordination with the technical manager who supplies the necessary information and tools.
Depending on the instrument typology, a single platform may call upon just one of these actors or orchestrate the entire mechanism. A real estate crowdfunding platform offering bonds will typically need to provide for all three, working in coordination. A platform focused on short-term loans or products not requiring collective representation may rely primarily on a technical manager. It is up to the platform, within the framework of its BCP, to identify these needs and structure the corresponding ecosystem.
How run-off management works in practice
The practical arrangements vary depending on the structure chosen by the platform, which may organise continuity itself with its own resources, rely on a specialised technical provider, or combine both approaches. Beyond these choices, run-off management always follows a series of key stages.
Everything begins with a preparatory phase that precedes any public communication. It involves gathering and verifying all the data and documents needed to continue operations: user database, project-by-project schedules, project owners, contractual documents. The quality of this preparation determines the quality of the transition: incomplete or inconsistent data will inevitably result in service interruptions at the very moment investors need them least.
Next comes the official notification to investors, a critical step that sets the level of confidence for the entire duration of the run-off. It must specify the practical arrangements for the transition, the points of contact, the timeline, any applicable fees, and how investors will be able to continue accessing their information and funds.
This is followed by the technical and financial transfer. Payment environments, user access, and repayment flows must be taken over without interruption. Investors' e-wallets are preserved, balances maintained, and schedules continue to be processed.
In parallel, the establishment of collective representation begins where the instruments require it, particularly for bond issues. General meetings are convened project by project to appoint or confirm the investor representative and to decide on the forthcoming management and recovery arrangements.
Once these stages are completed, the mechanism remains active until all projects are fully extinguished. Data is then archived in accordance with applicable retention periods.
Run Off by Capsens: technical expertise serving continuity
Behind Run Off is Capsens, a European fintech agency that has been developing bespoke solutions for over ten years for all players in the online savings ecosystem across Europe: crowdfunding platforms, online banks, wealth-focused fintechs, investment and insurance operators. From this expertise, Run Off by Capsens was born in 2023 — a technical run-off management solution designed specifically for CSP platforms, regardless of their model: debt (loans, bonds), equity, or other financial instruments. More than 30 platforms across Europe now rely on this solution.
Depending on the platform's typology, Run Off can act as the sole provider of run-off management or integrate into a broader ecosystem including investor representatives and recovery partners. In all cases, the solution provides dedicated dashboards for each stakeholder, with features tailored to their respective needs: schedule viewing, e-wallet management, news publication, tax document generation, and monitoring of ongoing operations.
Beyond the standard solution, Capsens supports each platform in structuring its continuity arrangements and can develop the necessary adaptations based on the specificities of the model, financial instruments, payment service providers, or applicable regulatory requirements. This ability to combine a proven technical platform with fintech development expertise is at the heart of Run Off's value proposition.
During the platform's active life, Run Off organises regular portability tests that enable the client platform to demonstrate to its national competent authority that its BCP is operational at all times — not merely documented. In the event of activation, Run Off takes over technical operations under pre-arranged conditions, ensuring continuity of operations for all stakeholders.
Conclusion
Run-off management is no longer a theoretical scenario relegated to the appendix of a licensing dossier. It is a pillar of a crowdfunding platform's credibility, on a par with its governance or its project selection policy. It protects investors until the last repayment, it secures project owners in the execution of their obligations, and it preserves the reputation of directors well beyond closure.
The best run-off management is the one prepared when it is not yet needed. Testing data migrations, formalising processes, identifying a technical manager, anticipating collective representation and recovery arrangements: these decisions, taken in stable times, transform what could be a crisis into a simple change of environment for investors.
This is precisely the mission of Run Off by Capsens: to provide the technical foundation that enables every CSP platform to build and operate a compliant, tested and ready-to-activate run-off management system — with the assurance, for its investors, that nothing will stop until the last euro has been repaid.
