Struggling guarantor loan provider Amigo has confirmed it has secured a three-month extension to its waiver from its lender after agreeing on a securitisation facility.
The size of the extended facility, which was due to end today (25 June), has however been reduced from £250m to £100m, due to the current suspension of all new lending activity by the company. The firm added that, as of the date of the extension, the facility was drawn at £27m.
It comes after the High Court rejected Amigo Loans’ proposed redress scheme towards the end of May, with Justice Miles issuing a ruling stating that he was “not satisfied that the court should sanction the scheme”.
Speaking at the time, he said: “I have accepted the submission of the Financial Conduct Authority (FCA) that the redress creditors lacked the necessary information or experience to enable them properly to appreciate the alternative option reasonably available to them.”
The FCA’s opposition to the scheme was due to its belief it was “inherently unfair”, adding it thought it would “place a disproportionate burden on consumers, as opposed to shareholders and bondholders, to keep the company afloat.”
On 2 June and following the High Court ruling, Amigo said it wouldn’t be appealing the decision and is “considering all options”, including insolvency. In order to avoid such a scenario, it did say it’s considering whether promoting another scheme would be possible. The firm also confirmed that, to ensure equal treatment of customers with redress claims, the payment of redress to creditors will continue to be stopped until further notice.
The waiver on the firm’s securitisation facility has been extended a few times, initially occurring from July to December 2020 so both the company and its lender could figure out what impact Covid would have on the business. This was later extended until today (25 June). This latest extension agreed by the parties will last until 24 September 2021.