10th Jun 2021 11:44
(Alliance News) - Amigo Holdings PLC confirmed Thursday it is continuing to mull all options after the UK High Court rejected its scheme to settle compensation claims.
Shares in the provider of guarantor loans were 0.2% higher at 8.17 pence each in London on Thursday.
The scheme was rejected in mid-May.
At the end of December, Amigo pursued a scheme of arrangement in order to attain certainty on the total liabilities from customer complaints. It believed that a scheme would prove to be the best vehicle for addressing customer redress claims, but admitted that the plan would not allow all claims arising from unaffordable lending to be paid in full.
The scheme was proposed by Amigo to settle claims following probes from UK regulators into mis-sold loans and the way that Amigo dealt with customer complaints.
The scheme would have made at least GBP15.0 million available to a million past and present customers. There is also the potential for a further GBP20.0 million and annual contributions worth 15% of Amigo's pretax profit over the next four financial years. Some 95% of customers voted in favour of the scheme.
On Thursday, Amigo added, based on the expected volumes of complaints from current and past customers, without a scheme of arrangement to deal with complaints, the value of its assets are less than the amount of its liabilities, resulting in an insolvent balance sheet.
Amigo noted it continues to engage with the UK Financial Conduct Authority, which raised objections over Amigo's scheme to the court, over an "appropriate way forward".
This could result in a revised scheme of arrangement or insolvency.
At the start of June, the Bournemouth-based provider of guarantor loans decided against appealing the rejection by the court, instead noting it was planning to promote another scheme of arrangement to avoid insolvency.
The scheme was rejected by the court after the FCA raised objections, saying it wasn't fair to customers in its current form.
By Paul McGowan; [email protected]
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