Amigo still considering options, including insolvency
Guarantor lender Amigo Holdings said on Thursday that it is still considering its options and could go bust after the High Court rejected a rescue plan last month that would have seen compensation payments for mis-selling capped.
"The board confirms that under all reasonable scenarios, based on the expected volumes of complaints from current and past customers, that without an appropriate scheme of arrangement to deal with the complaints, the value of Amigo's assets are less than the amount of its liabilities, resulting in an insolvent balance sheet," it said.
The lender, which was charging a representative APR of just under 50%, said it continues to engage with the Financial Conduct Authority to identify an appropriate way forward. "This could result in a revised scheme of arrangement or insolvency," it said.
Amigo shares tumbled late in May after the High Court ruled against its rescue plan. The judge said in his ruling: "The FCA expects the directors to continue to explore and promote a restructuring which fairly allocates the benefits and losses among the various stakeholders. I agree with that, and would urge the directors to continue their efforts to promote a suitable restructuring."
The FCA had already said the plan was unfair as it placed "a disproportionate burden" on customers, as opposed to shareholders and bondholders, to keep the company afloat.