Subprime lender Amigo Loans faces potential insolvency within two months.
Subprime lender Amigo Holdings is racing against time to secure its survival before it spirals into insolvency, the troubled company warned on Monday. With limited funds set to last only until early July 2025, the collapsing firm must raise additional money to keep the RTO search alive.
Since ceasing trading in March 2023, Amigo has been going through a wind-down process, following regulatory issues that forced it to halt new loan offers three years back. The Financial Conduct Authority (FCA) found Amigo lax in conducting proper affordability checks before dishing out loans with high-interest rates to borrowers with shaky credit histories[2].
Amigo secured High Court approval for a redress scheme and was given approval from the FCA to resume lending in October 2022, but failed to raise the required funds to keep the business afloat, leading to an orderly wind-down[1].
As a result, the company shared the latest shake-up of its senior leadership team. Kerry Penfold, the group chief executive and director, has announced her immediate departure from the role, but will continue managing subsidiaries until the end of the month[1]. Nicholas Beal, the chief restructuring officer, will join the group's board as an executive director and will take over Penfold's corporate responsibilities, along with his current role[1]. Michael Bartholomeusz, a non-executive director and chair of the audit and risk committees, has also stepped down but will continue serving as a non-executive director of subsidiaries[1].
Despite the financial woes, Amigo continues its efforts to find a suitable partner for a reverse takeover (RTO) to secure its long-term viability. However, the company faces a tough challenge, given its limited funds and the fast-approaching deadline[1][3]. If it fails to raise the necessary funds, Amigo may soon declare bankruptcy.
Extra Insights
The Costly Scheme of Arrangement:
The Scheme of Arrangement, designed to address the issues that led to Amigo's downfall, has been costly. In the twelve months to March 31, 2025, Amigo Holdings has reduced its cash reserves by £136.1 million due to redress payments under the scheme[2].
Claimant Action:
To receive their payments, claimants must provide valid bank details by May 17, 2025[1]. Failure to do so may result in missed redress payments.
Sources
[1] Amigo Loans given seven weeks to either raise cash or go out of business[2] Amigo Loans speeds up return of money to customers[3] Amigo: Firm may run out of money this summer[4] Amigo makes changes to leadership team[5] Subprime lender Amigo stops trading, citing regulatory issues
The troubled company, Amigo, is seeking additional investment in the finance industry to keep its reverse takeover (RTO) search alive, as its limited funds will only last until early July 2025. Given the regulatory issues faced by Amigo in the business sector, it faces a challenging industry environment as it attempts to secure its long-term viability.
