Amigo borrowers vote to get more of their money back
A creditors meeting took place yesterday where borrowers voted on two alternative redress schemes set out by the guarantor loan firm.
A majority total of 145,532 votes were in favour of Amigo’s preferred ‘new business scheme’.
This would keep the business open, see cash returns to creditors at an estimated 42p per £1 of claim, and require it to start lending again within nine months of approval.
Amigo Holdings said this represented 88.8% by number and 90% of value (£459.5m). By contrast, 18,401 votes (£50.8m) were against this scheme.
Meanwhile, a lesser 134,677 votes were in favour of Amigo’s ‘wind down scheme’ while 27,363 voted against. This fallback solution would have resulted in claimants predicted to get back 29p of every £1 they’re owed. It would have resulted in Amigo shutting up shop.
By values, it stood at £411.8m in favour, and £92.2m against.
In order for the new business scheme to go ahead, it requires sanction by the court which is set to take place on 23 and 24 May.
Amigo has also requested a suspension of its listing of ordinary shares of 0.25p each nominal value on the main market of the London Stock Exchange from the date of the court hearing starting 23 May “until such time as the company has time to update the market”.
Amigo redress scheme
It’s been a long journey to get to this point. But it all started in 2018 when Amigo started to receive affordability complaints and mis-selling concerns. Where a customer’s complaint was upheld, Amigo was ordered to refund the interest paid or update the outstanding balance.
However, with an influx of compensation claims, Amigo was facing collapse and so in May 2021, it published a rescue plan which was rejected by the High Court for being ‘inherently unfair’.
In December 2021, Amigo proposed two new alternative redress schemes, with both options seeing affected borrowers receive less money than owed.
But in March 2022, the regulator, the Financial Conduct Authority confirmed it wouldn’t oppose Amigo’s scheme of arrangement proposals which were due to be heard at the High Court that month.
At the time, the FCA said the options “represented an improvement on last year’s failed proposal and has the support of the independent creditors committee set up to advance the best interests of those customers owed redress”.
It added that where Amigo does resume lending, it would be supervised closely.
‘Maximum possible redress to borrowers’
Gary Jennison, chief executive officer of Amigo, said: “Our customers have voted in favour of the new business scheme, which the board of Amigo believes offers the maximum possible redress to creditors. 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, and a significantly dilutive equity issue is needed to fund the scheme and to recapitalise the ongoing business given the requirements of the schemes for the transfer of virtually all existing assets to the redress creditors.
“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.”
To qualify for court approval, each scheme requires that more than 50% of all creditors who vote to vote in favour, and the total value of their claims to represent at least 75% of the value of the claims of all creditors who vote.