High court approves Amigo Loans’ creditor vote

The result of the hearing, which took place last week (8 March), will offer its creditors a chance to vote on its two schemes of arrangement - these being its new business scheme and its wind-down scheme.

Commenting on the announcement, Amigo chief executive Gary Jennison said: “We are pleased that the court has agreed that the schemes can proceed to a creditor vote. The financial offer has been significantly improved and we will be doing everything we can to encourage creditor participation.

“As we have said many times, significant hurdles remain. Customers must first vote in favour of a scheme. 

“We then require the high court to approve a scheme in May and, if it is the new business scheme, we must satisfy the FCA on a number of conditions before we can return to lending. A significant capital raising must then be completed within a year of the court sanction hearing.

“Compromises and difficult decisions have been required to enable us to offer creditors the best possible outcome in the circumstances and for Amigo to have a future as a regulated lender in an important market segment. The road ahead is not easy, but we are on the right track.”

This creditors’ meeting will take place on 12 May, with borrowers and and guarantors - past and present - who believe they have a valid claim against Amigo or the Financial Ombudsman Service - will be able to vote on the schemes. 

Towards the end of last year, the firm outlined two new schemes of arrangement,after the high court rejected its proposals for a redress scheme in May. The business’ preferred option is its new business scheme - which it has “substantially improved” on 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. 

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

The second proposed scheme would be a “wind down scheme”, which would see a managed wind down of Amigo Loans as a business under a scheme framework. 

Prior to the court hearing, regulator the Financial Conduct Authority (FCA) said it didn’t intend to oppose Amigo Loans’ schemes of arrangement. It did, however, go on to say it reserves its right to intervene - both more generally and if the facts change. 

And in relation to the firm’s proposed return to lending, the FCA says this remains ongoing - including its assessment as to whether the business is failing or is likely to fail to satisfy the regulator’s threshold conditions.