Creditors at payday lender Amigo back scheme for survival

Firm does not have resources to meet liabilities arising from historic lending practices

Amigo, the troubled subprime lender, said its creditors had backed a court scheme and new equity issue that would allow it to move on.

Amigo came unstuck after complaints soared over its lending practices. It has now requested a suspension of its shares while the court process completes.

The business said its creditors had voted for a scheme that it hopes can give them 42p for every £1 that they are owed.

The proposal was backed by nearly 89 per cent of the customers who voted, and beat a second proposal which would have wound the business up with a lower payment to customers.

"Our customers have voted in favour of the new business scheme, which the board of Amigo believes offers the maximum possible redress to creditors," said the chief executive, Gary Jennison.

“This is an important step to address the liabilities that arose from historic lending practices under previous management.

“However, the new business scheme still needs to be sanctioned by the court.”

The case will go in front of the court on May 23rd and 24th.

The business’s future has been in limbo for two years after it received so many compensation claims that it simply could not pay them all.

A year ago, the wronged customers voted in favour of another deal, which would have given them just 10p for every £1 that they were owed. But this was thrown out by the High Court, which said it was not fair.

Amigo also has an Irish operation, and started lending here in February 2019, targeting people with “bad credit”, who had been turned down by traditional lenders. It offered loans of up to €5,000 at an annual rate of 49.9 per cent.

However, it stopped all new lending pending its restructuring. – PA