FCA won't oppose Amigo Loans’ scheme of arrangement

It explained that the guarantor loan provider’s scheme represents an improvement on last year’s failed proposal and has the support of the Independent Creditors Committee - which was set up to advance the interests of those customers owed redress. 

If the scheme is sanctioned by the court - the hearings for which take place between 23 and 24 May - the FCA said the firm could resume lending if it meets certain conditions. These include meeting the threshold conditions and testing of the company’s new lending system being completed to the satisfaction of the regulator. 

It has, however, said it reserves the right to intervene, including engaging in the court process or to take regulatory action against Amigo at any point, if the FCA considers that facts or circumstances have sufficiently changed. 

Towards the end of last year, the firm outlined two new schemes of arrangement, after the high court rejected for a redress scheme in May 2021. The firm’s preferred option is its new business scheme - which it has “substantially improved” from the first scheme in 2021 - and is contingent on new lending restarting and the firm completing a successful equity raise. 

This 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. 

It also includes a provision for an additional payment to redress creditors in the event the existing loan book generates a better return than currently anticipated. Additionally, it 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. 

Commenting on the latest update from the FCA, Amigo Loans’ chief executive Gary Jennison said: “We thank the FCA for its confirmation that there has been a significant improvement in the fairness of the schemes compared with Amigo’s first scheme, which was rejected by the court in May 2021. 

“We also welcome the confirmation that the FCA does not consider it necessary to appear at the sanction hearing to oppose the schemes or to present any evidence of its own concerning the schemes. These confirmations are positive steps towards delivering the best outcome possible, given the circumstances, for our customers, creditors and other stakeholders. 

“There remain significant obstacles to overcome, including the need for a significantly dilutive equity issue, to recapitalise the ongoing business given the requirements of the schemes for the transfer of virtually all existing assets to the redress creditors.”