Amigo delays court hearing for new scheme

Following on from this the court sanction hearing will take place on 23 and 24 May 2022. This will allow the detailed scheme’s documentation to be finalised in good time before the court convening hearing.

At the start of December last year, Amigo proposed two distinct schemes of arrangement to its creditors. The first was the “new business scheme”, which is contingent on new lending restarting and the firm completing a successful equity raise. The second would be a “wind down scheme”, which would see a managed wind down of Amigo Loans as a business under a scheme framework. 

The “new business scheme” proposes an initial contribution of £97m, to be generated from internal resources, with a significant proportion being derived from the run-down of the existing loan book. 

The scheme includes provision for an additional payment to redress creditors in the event the existing loan book generates a better return than currently anticipated. 

The company also intends to raise capital, within one year of any potential sanctioning of the new business scheme by the court, to fund both the £15m scheme contribution and future lending. 

This new scheme would require the company to issue at least 19 new shares for every existing share in the company. This would leave existing shareholders with no more than five percent of the company’s share capital, reflecting a UK market standard level of economic interest for equity holders where creditors are not being paid in full. 

Amigo believes these provisions are necessary both to secure the best result for redress creditors through the schemes that are possible in the circumstances and to address the specific reasons cited by the court when rejecting the scheme proposals. 

If the court doesn’t sanction Amigo’s new business scheme, the firm will enter a wind down scheme or insolvency. The firm says under this scenario, redress creditors will receive less than under the new business scheme.