Updated: Amigo Loans Scheme of Arrangement

15th March 2022:

The High Court has announced that it would allow Amigo Loans to invite past customers and creditors to vote on their proposed Schemes of Arrangements. Creditors include: “past and present customers of Amigo and the Financial Ombudsman Service,” which includes customers who are due compensation from Amigo Loans for mis-sold and irresponsible loans.

The High Court will allow Amigo to invite creditors to cast their vote

Amigo Schemes of Arrangement:

There are two schemes being put forward by Amigo Loans, the New Business Scheme and the Wind-down Scheme. Customers are being asked to vote on which Scheme they prefer, through a online voting portal. The one with the largest number of votes will no doubtly be used as the final Scheme of Arrangement.

Amigo Loans New Business Scheme

This scheme would see Amigo return to lending (i.e giving out loans), with improved loan offerings together with a “new and different business model“. This is the preferred solution for Amigo Loans as it means that they can continue the business.

Through this scheme, Amigo Loans would have a guarenteed minimum of £112 million available to pay compensation claims. It is predicted that customers could receive 42p for every £1 they are owed (source: MoneySavingExpert).

To enable this solution, or scheme, to go ahead there are two conditions that must be met, including:
1) Amigo Loans will need to recommence lending to customers within 9 months of the scheme being approved
2) Amigo Loans will need to raise over £70 million within the first 12 months of operating.

If these two conditions are not met, Amigo Loans will look to “wind-down” the business (which is also the second scheme).

Amigo Loans Wind-down Scheme:

On this scheme, there would be “no set cash amount for customers and Amigo’s business will be wound down.”, meaning that there is no guaranteed amount of money that customers would receive. In closing down the business, any outstanding loans would be recovered. Once this money is used to pay for operating costs of the business and bonds, the remaining amount would then be used to pay customers who are owed compensation by Amigo Loans.

It is predicted that customers could receive 29p for every £1 they are owed (source: MoneySavingExpert) through this scheme.

Amigo Loans and what happens now?

Customers will be invited to vote on which scheme they prefer, either the New Business scheme which sees Amigo return to lending, or the wind-down scheme, where Amigo Loans would be slowly closed down.

Voting closes Mid May with a second court hearing in Late May 2022, to approve one of the schemes.

Amigo Loans wind-down scheme does not guarantee a fixed amount of money for customers

Previous Amigo News from 2021:

Who are Amigo Loans?

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.

Why have Amigo introduced a Scheme?

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.

I’ve had a loan with Amigo. What should I do now?

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/

Whilst we wait…

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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