Amigo Loans faces insolvency after court rejects rescue scheme
Subprime lender Amigo has warned it is facing insolvency after a rescue plan was rejected by the high court last week.
On Tuesday, the company told investors that it will not appeal against the judgment made by Mr Justice Miles.
Amigo had put forward a rescue scheme, which would see it hand out lower than expected compensation packages to customers, in a bid to secure its future.
The lender had been facing financial difficulty after being ordered to make compensation payments to former and current customers over historical complaints.
The board is committed to finding the best solution it can for Amigo’s customers and other stakeholders and will be working with its stakeholders, including the FCA, to achieve that solution as quickly as it can
The group said it will “consider all options, which includes insolvency” and will see if there is the potential for another rescue scheme to avoid collapse.
Gary Jennison, chief executive officer of Amigo, said: “Without a scheme, Amigo faces insolvency as it will be unable to satisfy its customer compensation claims as well as meeting the legally binding funding obligations owed to its secured creditors.
“The board is committed to finding the best solution it can for Amigo’s customers and other stakeholders and will be working with its stakeholders, including the FCA, to achieve that solution as quickly as it can.”
Amigo said that 95% of customers who had been mis-sold loans, and were due compensation, had approved the rescue plan.
The lender, which typically charges 49.9% interest, offers loans to borrowers with poor credit histories on the basis that they have a friend or family member act as a guarantor.
Shares in the company were down 7.9% in early trading.