Business

Trading in Amigo shares suspended ahead of court hearing

Amigo Loans has suspended trading in its shares ahead of a hearing that could allow it to start lending for the first time in over a year.

The troubled payday lender said it had taken the step over concerns that market-sensitive information could be released during a High Court hearing about its proposed financial plan, which would offer £97mn to creditors.

The share price is down more than 66 per cent over the past year, despite a modest rise of 6.6 per cent in the year to date.

Amigo stopped lending in November 2020, citing uncertainty surrounding the coronavirus pandemic. It has been unable to resume the business as a result of a struggle over compensation for historic mis-selling.

The company has faced complaints from consumers who accused it of failing to check whether their loans were affordable.

A previous scheme of arrangement proposed by Amigo was rejected by the Financial Conduct Authority, which stated that it unfairly benefited shareholders over customers.

The watchdog has not intervened in the new plan, which offers better compensation for customers. The scheme seeks to raise £15mn through a rights issue, in part to finance new lending. The FCA also said in March that if the court approved the scheme and Amigo met lending conditions, the company could return to lending.

If the court does not permit the scheme of arrangement, the company will instead ask it to approve a wind-down scheme.

Amigo’s struggles reflect industry-wide troubles in recent years, as the regulator has clamped down on so-called non-standard finance providers amid concerns of a cycle of debt dependency.

The number of active high-cost, short-term lenders in the UK fell by almost a third between 2016 and the third quarter of 2020, according to FCA figures.


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