Creditors of collapsed payday lender Curo Transatlantic, including hundreds of thousands of people with outstanding claims, could receive a fraction of what they are owed.
Curo Transatlantic, which traded as Wage Day Advance and Juo Loans, was hit with thousands of compensation claims for allegedly mis-sold loans, causing it to fall into administration in February.
The sector more widely has been struggling with claims, with Wonga notably collapsing in the same way last year.
Curo completed a pre-pack administration sale of part of their loan book to Shelby Finance (trading as Dot Dot Loans), a regulated firm and subsidiary of Morses Club, a home credit provider and short-term lender. Around 50,000 customers will be moved from Curo to Shelby Finance.
However, now that the business is in administration, customers who have paid off loans but are entitled to compensation have become unsecured creditors.
Communications have been sent to creditors putting forward a proposal for how much they can expect. Creditors will vote on the deal on April 25, after which it is hoped a deal can be struck.
Administrators Ed Boyle and Howard Smith from KPMG are using a calculator to determine how much individual customers still owe, after compensation is subtracted.
Calculations are also being made to work out compensation entitlement for each former borrower who has already paid off their loans, or new balance if they are still paying back loans.
Recipients must reply to claim the compensation that has been calculated.
The administrators said in a statement: “The joint administrators will contact customers with outstanding balances owing to the companies in the coming weeks, as soon as they have determined their strategy for the remaining loan book.
“Outstanding loan balances due to the companies are being frozen such that no further interest and charges will accrue.
“The joint administrators will also contact known potential creditors of the companies in the coming days, to provide details of their proposals for the administrations. This will include customers who have been identified by Curo Transatlantic as having a potential redress claim.”