Amigo looking at new compensation scheme as it faces insolvency
Amigo Holdings is facing insolvency after the High Court rejected a rescue plan by the guarantor lender that would have seen compensation payments for mis-selling capped.
The company, which was charging a representative APR of around 50%, confirmed on Tuesday that it will not be pursuing an appeal following the Court judgment.
"The board of Amigo continues to consider all options, which includes insolvency, and whether it might be possible and appropriate, given the cost of a scheme, to promote another scheme of arrangement to avoid insolvency," it said. Amigo said it will continue to liaise with the Financial Conduct Authority over the coming weeks to seek to address its concerns as quickly as possible.
The FCA had opposed the scheme on the basis that it was unfair and "placed a disproportionate burden on customers, as opposed to shareholders and bondholders, to keep the company afloat".
Amigo said compensation payments remain on hold and that its full-year results will be delayed.
Chief executive Gary Jennison 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."