Amigo Loans - Comments

Amigo’s Practice Statement letter provides a timetable for a resolution to its unaffordable selling issue; however, success is still dependent on the FCA who has reserved its position whilst it reviews the proposed Scheme. The company hopes to approach the court with a creditor supported proposal by mid-April 2022. Amigo’s preferred option is a Return to Lending, but if this is not approved a wind-down of the business is proposed. We expect creditors to support a return to lending as this offers the best recovery for them. We also expect that the FCA will support a return to lending as it will not want to eliminate a source of consumer lending for a slice of the population without access to traditional bank lending. However, it has told Amigo that it could impose regulatory constraints that render the New Business Scheme unviable and force Amigo into either a wind-down or an insolvency process (which would be broadly the same as the Wind Down).

- Return to Lending: Capital will be bolstered by an equity raise of “at least £70m” within 9-months of court approval of the scheme being approved. Assuming a successful cash raise, £112m would be provided to the claimants. Expected recoveries are around 42p/£ for claimants.

- Wind-down: which the company expects recoveries of £29p/£