Subprime lender Amigo said on Tuesday that its losses increased substantially in the last financial year, as it battles to secure its future after a court rejected a proposed rescue plan from the company in May.
Amigo posted a pre-tax loss of £284 million (€331.7 million) for the year to March 2021, compared with a £38 million loss the previous year.
The company's future has been in the balance since receiving a deluge of customer complaints that it mis-sold them loans in recent years. It was investigated by Britain's industry watchdog, the Financial Conduct Authority (FCA), over how it assesses the creditworthiness of customers.
The firm provided loans to borrowers who struggled to obtain credit from mainstream lenders, if a friend or family member acted as a guarantor for them.
Amigo also has an Irish operation, and started lending here in February 2019, targeting people with “bad credit”, who had been turned down by traditional lenders. It offered loans of up to € 5,000 at an annual rate of 49.9 per cent.
However, it has stopped all new lending pending its restructuring.
A proposal by the company that would have resulted in customer compensation being cut was rejected by London's High Court, after the FCA objected.
Amigo said on Tuesday it was continuing to pursue an alternative scheme of arrangement, and that this provided a realistic alternative to the company’s insolvency.
However, the company disclosed there was a “material uncertainty” around its ability to continue as a going concern.
“The continuation of Amigo as a business is dependent on our successful pursuit of a scheme, our ability to raise capital in the future to further support new lending, and a satisfactory resolution of the FCA investigation initiated in May 2020,” the company said. – Reuters
