High Court date could be adios Amigo

SUB-PRIME lender Amigo faces a make-or-break High Court hearing on Tuesday, which will decide whether or not it will collapse into administration.

Amigo has presented the High Court with a plan to cap compensation payouts to hundreds of thousands of customers. The business has been crippled by a flood of complaints that it sold unaffordable loans, which were guaranteed by friends and relatives of borrowers.

The High Court will decide if the scheme is fair. If it rules it is, it will be put to a creditors’ vote. If not, Amigo is likely to go into administration.

The scheme is likely to result in Amigo customers receiving much less compensation than they are owed. Although they both have misgivings, the City watchdog the Financial Conduct Authority and the Financial

Ombudsman will not object to the scheme, given the alternative is likely to lead to Amigo’s collapse and creditors getting nothing.

When it floated in 2018 Amigo was valued at £1.3billion, which turned its founder and self-confessed former petty criminal James Benamor into a billionaire. Since then, the shares have lost 95 per cent of their value.

Amigo is not the only sub-prime lender looking to the courts to help draw a line under compensation claims from borrowers.

Provident Financial has submitted a £50million compensation plan to the court, which will be heard on April 22. It says if the court does not approve of the scheme, it will be forced to put its consumer credit business into administration.