21st May 2021:
This week was due to be a big week for Amigo Loans, with the Second Court Hearing to consider whether Amigo’s SOA (Scheme of Arrangment) was to go ahead. Instead, it’s been a week of opposition, changes and developments, in addition to no firm ruling from the judge, who instead aims to issue a ruling “in due course“.
Other Amigo news from this week included:
Amigo requested that trading in it’s shares be temporaily suspended during the court hearing, for fear that “asymmetric” information would leak out, affecting it’s shares. As mentioned on LSE website “The guarantor loans provider said the limited capacity in court means there is a risk of “asymmetric” information getting out before it has time to update the whole market.“
It has been reported that 95% of Amigo Claimants Voted in favour of the plan. This is a staggering amount of positivity for the scheme from those who have a complaint with Amigo Loans, however, this could be due to the information published by Amigo Loans stating that without the scheme it “would go insolvent and that claimants would get nothing if the scheme failed.”
Last week the FCA (Financial Conduct Authority) announced that it will oppose, in court, Amigo Loans Scheme of Arrangement, it’s rescue plan to save it’s business by limiting compensation payouts to customers who were mis-sold high-cost loans. Read more about this development on our website here.
Amigo Loans is a UK based lender specialising in loans for people who are self-employed, have low credit scores, have County Court Judgments (CCJ) or who simply find it difficult to get a loan from other providers. The company offered loans to individuals at 49.9% APR and have drawn a volume of customer complaints over allegations of selling customer loans that they cannot afford.
Amigo Loans are looking to introduce a Scheme of Arrangement, to settle customer complaints. In June 2020, it was reported that Amigo Loans reached a deal with the FCA to deal with a backlog of overdue cases, putting aside £35 million to settle 9,000 complaints.
Since then, Amigo has said that it will be unable to continue to pay refunds to customers who were given unaffordable loans, instead looking to introduce a scheme that will see customers receive around 10% of their anticipated refund value.
A Scheme is a mechanism that will require customer and Court approval, to enable us to fairly and equitably receive and consider all claims related to loans made by Amigo. The purpose of the Scheme is to secure a better return for Amigo’s customers than would be possible if Amigo went into insolvency. Should the Scheme not be approved by customers, Amigo will go into insolvency and unsecured creditors (including customers with claims for compensation) would receive nothing.Source: Amigo Loans
Over a million Amigo Customers have been contacted about the scheme, including current customers and all previous customers whose loans have been repaid. On the 12th May 2021, there was news that suggested that the majority of customers have voted in favour of the Scheme.
If the scheme is approved, it would ensure that all customer complaints would receive something, however, it would not be the full amount that customers with a complaint are should receive. It is estimated that under the scheme, customers would receive 10% of what the original refund value under the scheme.
If the scheme is not approved, it is likely that Amigo Loans would be placed into administration or liquidation, resulting in no customer refunds or compensation.
If you have already made a claim to Amigo Loans for a mis-sold loan, or are a current Amigo customer, you should have received details of the scheme via email or letter. Amigo Loans have also set up a website with details about the Scheme: https://www.amigoscheme.co.uk/
In the meantime, whilst we wait for news on Amigo’s Scheme of Arrangement, either way, we will keep you fully informed and up to date.
If you have experienced being mis-sold another type of financial product, a Guarantor, Payday or Doorstep Loan, PCP Car Loan or Catalogue Card Credit, we can help. We want to help you get the compensation you deserve, before any other schemes pop up!
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