13 May 2022
Borrowers who were mis-sold loans they could not afford by Amigo have thrown the struggling business a lifeline by voting for a compensation package which could allow it to continue trading.
The business said that 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% 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 23-24.
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.
“Amigo doesn’t have enough money to pay the full amount of cash compensation to the people who have valid claims,” the company recognised in a document sent to complainants.
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. “We’ve learnt from the court’s decision,” Amigo said in the run-up to the most recent vote.
So, over recent months, it has worked with a panel of eight random-chosen customers to design two new options that all creditors would then be able to vote on.
Although still just an estimate, the company thinks it can pay back 42p for every £1 that was owed if it can continue trading and some other conditions are met.
The other option, which was also passed in the vote, but with a lower tally, would wind down Amigo and return 29p for every £1 that it owes to customers with valid claims.
The company is still facing an investigation by the Financial Conduct Authority (FCA). It will need to sell new shares and dilute the ownerships of its old shareholders to raise money to repay customers.
Mr Jennison said: “We would like to thank all those customers who took the time to make their voices heard, as well as the FCA who confirmed last month there has been a significant improvement in the scheme terms compared with Amigo’s first scheme.
“The approval of the scheme will deliver the best possible outcome for creditors, and Amigo’s proposed return to lending will allow us to play an important role in the non-standard lending sector, at a time of unprecedented rising living costs.”