Jitters over the company’s future have caused shares to plunge 75% in the past month. The looming threat of the company’s insolvency sent shares down 11% on Tuesday morning to 7.3p. “The board is committed to finding the best solution it can for Amigo’s customers and other stakeholders and will be working with its stakeholders, including the FCA, to achieve that solution as quickly as it can,” he added. “Without a scheme, Amigo faces insolvency as it will be unable to satisfy its customer compensation claims as well as meeting the legally binding funding obligations owed to its secured creditors,” Amigo’s chief executive, Gary Jennison, said.

But Amigo said it was unable to keep up with the mounting costs of those claims, and was at risk of going under, unless it could cap compensation payouts in a scheme covering nearly a million of its current and former customers.īut last week the high court refused to approve Amigo’s scheme, which could have seen successful complaints receive as little as 5% to 10% of any successful claim, and capped the compensation pool at a maximum £35m and 15% of profits over the next four years.Įxecutives warned Amigo would be likely to collapse barring a new proposal. The lender would also need the support of its regulator, the Financial Conduct Authority, which criticised its first scheme for being unfair to some of the UK’s poorest borrowers.Īmigo, which grew in popularity following the demise of sup-prime rival Wonga in 2018, has been deluged by mis-selling claims by customers who have accused the business of handing out unaffordable loans.

However, crafting a new scheme could be costly and take months to complete, and would still need to be approved by its creditors and the courts.

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