The company had proposed to pay £35m in cash and 15% of its future profits to customers who were owed redress, which would have resulted in customers receiving an estimated 10p in the pound. However, the FCA rejected the proposal, as it considered it unfair and inadequate, and suggested that the company should pay more to customers, or seek alternative sources of funding. The company also faced opposition from some of its creditors and shareholders, who argued that the scheme of arrangement would undervalue the company and dilute their interests.
In March 2023, Amigo Loans announced that it would stop lending and enter into an orderly wind-down, with all surplus assets to be transferred to the creditors of its compensation scheme. The company said that it had no other viable options, and that it had exhausted all possible avenues to save the business. The company said that it would continue to collect the outstanding loans from customers, and provide support and assistance to those in financial difficulty.
The company also said that it would update its customers and stakeholders on the progress and outcome of the wind-down process. The company’s shares plunged 75% to 0.4p on the news, wiping out its market value and leaving its shareholders with nothing. The company’s customers who were owed compensation were also left disappointed, as they would receive an estimated 17p in the pound, according to PwC, which was appointed to supervise the process.
The Implications of the Liquidation of Amigo Loans
The liquidation of Amigo Loans has significant implications for the subprime lending sector and the wider society. The liquidation of Amigo Loans marks the end of one of the largest and most prominent subprime lenders in the UK, which had a market share of 88% in the guarantor lending segment. The liquidation of Amigo Loans also reflects the challenges and risks faced by the high-cost credit sector, which has been under pressure from the regulators, the courts, the media, and the public, for its alleged predatory and irresponsible practices.
