FCA set to oppose Amigo Holdings rescue plan

(Sharecast News) - Amigo Holdings said on Tuesday that most of its creditors have voted in favour of a rescue scheme that will see them get less compensation for misselling than they are owed, but the Financial Conduct Authority looks set to oppose it on the basis that it's not fair.

The subprime lender has already said it will go bust due to misselling compensation if the plan does not go through, leaving claimants with nothing at all.

A total of 74,866 votes cast through an online portal were in favour of the scheme, and 3,862 votes against. The votes in favour represent about 95.1% of the total number of votes cast and 95.7% of the value of the claims. 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.

The scheme also needs to be sanctioned by the Court and a hearing is set to be held on 19 May.

However, Amigo has received a letter from the FCA stating that it now plans to appear at the Court sanction hearing to oppose the scheme, even if creditors agree to it. The FCA is concerned that while creditors' claims are being significantly reduced, other stakeholders are not being asked to contribute.

Broker Shore Capital said it doubts a Court will go against the wishes of creditors, especially when the majority voting in favour is likely to be so large, and it noted that the FCA has already said it is not proposing to take any additional regulatory action that might stope the scheme were it to be agreed by the creditors and sanctioned by the court.

"Amigo has also previously indicated that the business would be forced into insolvency proceedings if the scheme fails to win approval, in which case claimants would get nothing. As such, 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.

"We think the FCA likely knows this and therefore is simply trying to be seen to do the right thing."

At 0820 BST, Amigo shares were down 13% at 25.68p.