Adios Amigo! Sub-prime lender to be wound down after it fails to secure emergency funds
Bye, friend! Subprime lender is liquidated after failing to secure emergency funds
Troubled Amigo Holdings will be liquidated after failing to secure emergency funds.
The Bournemouth-based subprime borrower said it will stop borrowing with immediate effect and will instead embark on an orderly 12-month run-down process.
The move will wipe out shareholders, with any remaining assets transferred to the compensation owed by Amigo after it was accused of lending money to people who couldn’t afford to pay back.
Liquidation: Amigo Loans, founded by James Benamor (pictured), said it would cease lending effective immediately and begin an orderly 12-month wind-down process
But Amigo – which specializes in lending to borrowers who can’t access loans from regular banks – said they would receive a “lower cash consideration” than they would have had emergency funding secured.
Shares crashed 85.6 percent, or 1.49 pence, to 0.25 pence. That valued Amigo – which was valued at £1.3 billion in 2018 – at less than £2 million. Chief executive Danny Malone described it as ‘a very sad day’.
Amigo’s 200 employees will continue to be paid as the company continues its years of winding down, he said.
The company has been on a survival basis since it was blocked from lending by the Financial Conduct Authority (FCA) in 2020.
It had failed to conduct proper affordability checks and dispense high-interest loans to borrowers with shaky credit histories.
Amigo secured Supreme Court approval last year for a recovery settlement and was given the go-ahead by the FCA to restart lending in October.
Under the terms of the scheme, the company had to raise £45 million from investors to stay afloat.
But Amigo said yesterday it has not received “hard commitments” from investors, who have been put off by the “increasingly difficult economic situation in the UK”.