Amigo Holdings shares fall 20% as regulator rebukes plan

© Reuters.

By Samuel Indyk – Amigo Holdings shares fell over 20% on Tuesday morning after the company announced it has received a letter from the Financial Conduct Authority (FCA) stating that the terms of its rescue scheme are unfair to creditors and that they plan to oppose the scheme in Court.

Amigo Holdings (LON:) said that most of the company’s creditors (95.1%) have so far voted in favour of the rescue scheme which will see creditors paid less compensation for mis-selling than they are owed.

The scheme requires more than 50% of all creditors who vote to vote in favour, and the total value of their claims to represent at least 75% of the value of the claims of all creditors who vote.

The rescue scheme also needs to be sanctioned by the Court where a hearing is set for 19th May 2021.

FCA letter

The letter from UK financial regulator states that they plan to attend the Court hearing through counsel to oppose the sanction of the scheme, even if approved by the requisite majority of scheme creditors.

The FCA argues that its concerns are in relation to scheme creditors’ claims being significantly reduced whilst other stakeholders, such as shareholders, are not being asked to contribute.

The FCA also says scheme arrangement have not arisen from negotiations with scheme creditors or any body representative of their interests.

Amigo argues that they will go bankrupt due to the scandal if the scheme does not go through, potentially leaving creditors with nothing at all.

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“If the FCA was to be successful in stopping the scheme going ahead, this would likely see an even worse outcome for claimants, thus defeating its own objective,” said Shore Capital.

At 10:50BST, shares in Amigo Holdings were trading lower by 20.3% at 23.5 pence per share.

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