Amigo Loans on the brink as lending break continues
Amigo Loans has warned it is at risk of insolvency as its break from lending to new customers continues.
The company set aside £344m as provision for a compensation scheme for customers who have complained that historic loans offered by Amigo were irresponsible and accrued interest that they would never have been able to repay.
In May 2021 the High Court rejected a settlement offered by Amigo Loans to its customers and new proposals will be set out by the company today.
Commenting on the company’s compensation efforts Gary Jennison, Chief executive of Amigo, said: “we’re pleased to be providing a meaningful update on our progress towards a new Scheme as we recognise it has been a long wait for all stakeholders.
“Clearly, it has taken much longer than we had hoped but it is critical that we get this right to achieve the fairest outcome for all creditors by ensuring we have listened carefully to their views and fully addressed the concerns raised by the High Court and the regulator last May,” he added.
Amigo’s revenue fell by 38.8 per cent to £56.5m in the first six months of the financial year compared to a year prior, primarily driven by the reduction in the loan book. However, the company still managed to turn a modest profit of £3.3m after tax, up from a loss of £67.9m in the previous year.
The company has today set out a new compensation scheme which is subject to reaching key milestones including a second successful creditor vote and approval by the High Court at a sanction hearing.
Without approval of its new compensation scheme the company warned it “expects to have to file for administration or other insolvency process.”
Amigo Loans’ share price is down 24.57 per cent today trading at 8p.
Read more: Amigo issues fresh warning over future despite profit rise