High Court rejects Amigo rescue plan, shares tank

by | May 25, 2021

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Shares of Amigo Holdings tanked on Tuesday after the High Court rejected the guarantor lender’s rescue plan.
Amigo had put forward a plan that would see its creditors get less compensation for misselling than they are owed. It argued that if the scheme of arrangement was not approved, it would go bust and claimants would be left with nothing at all.

Despite being approved by most of its creditors, the rescue plan was rejected by the High Court.

“The board is reviewing all options including an appeal,” the company said in a brief statement.

Chief executive Gary Jennison said: “Amigo is incredibly disappointed that the scheme has not been approved despite the 74,877 customers who voted in support of the scheme, representing over 95% of those who voted. We are currently reviewing all our options and will provide an update at the earliest opportunity.”

The Financial Conduct Authority, which had already made clear that it opposed the scheme on the basis that it was unfair, said: “The FCA has, through its continued engagement with Amigo and participation in the Court hearing, sought to get a better, fairer deal for Amigo’s customers due redress. We believe that a fairer compromise could have been offered to customers, but was not.

“The FCA considered it necessary in this case to share with the Court its view that the scheme as proposed was inherently unfair, as it placed a disproportionate burden on customers, as opposed to shareholders and bondholders, to keep the company afloat.”

The FCA said it believes Amigo can propose a fairer scheme to customers. “It should also ensure that its customers are fairly represented and advised on alternative proposals for a scheme,” it said.

At 0820 BST, the shares were down 61% at 7.19p.

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