Britain’s largest sub-prime money lender on the brink of collapse as echoes of the 2008 Credit Crunch continue

There’s a certain irony that a company that lends to those in financial straits is itself in financial trouble. That’s the situation today for Amigo after the High Court rejected its plan to set aside cash for compensation to victims of miss-selling last week.

The BBC’s Kevin Peachey said: “Amigo, which lends money to those with a poor credit history, has said it faces insolvency without a new plan to cap pay-outs for mis-sold loans. Now Amigo has said it will not appeal against that decision and was, instead, investigating all options - including an alternative plan, or insolvency.”

Ian Carrotte of ICSM whose members keep tracks on struggling companies and bad payers said not only were jobs at stake but also suppliers to Amigo may not get paid.

He said: “Many self-employed people who have struggled to pay bills due to the lockdowns and business shut downs will have taken out loans with Amigo in desperation. With an interest rate of nearly 50% a borrower has to pay nearly double the amount they borrow. It’s insane but the restrictions to business has driven many to borrow on such terms.”

_{How the papers saw the infamous 2008 Credit Crunch}

The firm’s share price collapsed today as administration loomed falling to just 8p. Last month Amigo thought they had found a solution to paying compensation to borrowers who had been given loans they could never afford to repay. The scheme would have channelled money into a separate company which would have protected the main business but with such a tiny turnout to vote on the plan the judge in the High Court rejected the plan in part as it placed restrictions on compensation claims.

Amigo has 150,000 customers but stopped lending last November as looming compensation claims threatened to force the company into making massive pay-outs. The sub-prime market has been bedevilled since the now infamous 2008 Credit Crunch which brought the banking system on both sides of the Atlantic to near collapse. Once it became possible to sue the lender for selling high interest loans to people with no hope of being able to repay the sector has struggled to remain solvent.

About ICSM Credit

ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com

For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk