Amigo Loans has a compensation scheme approved by the National High Court
Lifeline for Amigo Holdings after High Court approves lender’s compensation scheme
- Boss of Amigo: The ruling is ‘good news for creditors, clients and employees’
- Amigo compensation package will return at least £112m to clients
- The Bournemouth-based company has not lent money since November 2020
A plan to repay customers to whom Amigo Holdings improperly sold high-interest loans has been approved today in a High Court hearing.
The decision represents a major victory for the beleaguered lender, whose survival has been in doubt for the past two years after a flurry of complaints from people who believe the company sold them loans they couldn’t repay.
It also means creditors are in line to receive at least £112m between them, with £15m coming from a share issue, although this could rise to £116m if they raise more than expected.
Approved: Amigo CEO Gary Jennison described the court ruling as “good news for creditors, customers and employees” that would help “draw a line under the mistakes of the past.”
Customers had already voted overwhelmingly in favor of the proposal at a meeting 11 days ago, while the Financial Conduct Authority (FCA) had said it would not attend the hearing to oppose or testify about the scheme.
Prior to today’s hearing, Amigo Holdings’ shares were suspended from trading due to concerns that the limited capacity of those attending the proceedings could lead to the leakage of market-sensitive information.
Investors should soon be able to start buying shares in the group again, although Amigo still requires FCA permission to start lending again, something it hasn’t done since November 2020.
Amigo CEO Gary Jennison said the court’s decision “would allow creditors the opportunity to maximize their compensation payments from Amigo.”
He added: “While we must obtain permission from the FCA to resume lending and raise fresh capital, the court’s ruling is welcome news for creditors, customers and employees, and brings us one step closer to delivering compensation and draw a line under the mistakes of the past.
If the ruling had gone against Amigo, the company would have asked the judge to accept an alternative offer known as an ‘alternative solution’, which was also approved by the majority of the borrowers on May 22.
Controversy: Amigo Holdings has been described by some parliamentarians as a ‘legal loan user’, because its business model consists of lending money to clients at interest rates of up to 49.9 per cent.
Such a proposal would have seen him stop lending, pay all necessary expenses and return excess cash to creditors before finally being liquidated.
That would have marked a dramatic downfall for the company, which specializes in offering loans to people with low credit scores as long as they have a “guarantor,” usually a family member or friend, who could foot the bill if the creditor couldn’t. just do it
This business model has been the subject of much controversy because Amigo lent money to clients at interest rates of up to 49.9 per cent, leading some parliamentarians to describe the group as a ‘legal loan user’.
The company has often been compared to payday lender Wonga, whose collapse in 2018 followed a surge in damage claims and an FCA investigation that found it had lent to people who lacked the ability to pay. to pay.
However, demand for Amigo loans continued to grow and it was valued at £1.3bn when it was listed on the London Stock Exchange in 2018, making its founder James Benamor one of the world’s richest billionaires. UK youth.
Since then, Amigo Holdings shares have plunged more than 97 per cent, and its current market capitalization is now worth less than £30m.