Guarantor loans provider Amigo Holdings warned on Monday that if it fails to receive court approval for its new business programme, Amigo Loans will be forced to enter into a wind-down programme or insolvency.
Amigo said if the programme, which proposes an initial contribution to creditors of £97.0m generated from internal resources, doesn’t get approved, redress creditors would receive less than under the new business scheme, while shareholders would receive nothing in respect of Amigo Loans.
The London-listed firm stated that its proposed new business scheme will require it to issue at least 19 new shares for every current share, leaving existing shareholders with no more than 5% of the group’s share capital, reflecting a UK market standard level of economic interest for equity holders where creditors have not been paid in full.
Chief executive Gary Jennison said: “The board is fully committed to providing the maximum amount of redress possible for qualifying creditors.
“Should creditors vote for the new business scheme and the court subsequently approve it, these provisions provide additional protection for creditors and address certain of the concerns raised by the court above the previous scheme. They are necessary for Amigo to survive and avoid insolvency.”
As of 0850 GMT, Amigo shares had sunk 55.78% to 2.65p.
