Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Franky, we didn’t get anything six months ago and until we see the new scheme proposals, we’ve still got nothing.
LTHcine - you’re putting words in my mouth. I don’t think shareholders have liability for company debts. Amigo could of course default on its obligations to creditors and go into administration and shareholders have no further liability (as well as no asset). But we’re talking about a scenario where Amigo wants to jettison the vast majority of its liabilities AND continue trading and generating value for shareholders. So the question is about how the pain should be allocated between creditors and shareholders (I would also like to see the very well paid execs recognise that their bonus plans looks obscene in this scenario).
The judge was clear that shareholders rank below creditors in insolvency so of course shareholders need to be ready for a haircut to get the scheme through. The question is how much of a haircut. I don’t see why creditors should accept a much more significant percentage loss than the shareholders (who rank below them in insolvency).
It’s NOT a new company. It’s still Amigo Loans Ltd. The same company that mistreated hundreds of thousands of customers. The same company that admits it owes its customers £300m+. The same company that says it was wrong in 65% of claims - NOT borrowers.
I don’t see why shareholders or exec members should be licking their lips at the prospect of a “feast” after it’s treated customers this way.
Fair enough, if Amigo wants to put things right as best it can. But scheme 1.0 was nowhere near. The supposedly new, customer focused board misrepresented the firm’s position to creditors whilst loading execs up with millionaire bonus plans.
It now needs to properly balance the benefits of Amigo being allowed to survive, and that should mean shareholder losses as well as creditor losses.
And I love you too! xxxx
So much “whataboutery”!
Nobody seems to want to confront the fact that Amigo admits that is it at fault in 65% of claims. That is the bottom line.
I am not going to defend people telling lies to get a loan. I just don’t think that’s the primary problem here. The issue is that Amigo gave people expensive credit who it admits it should never have approved. Time to smell the coffee!
Bryn2503 - mistreated as defined by Amigo itself. Mistreated as in Amigo admits it should never have lent to 65% of complainants and the high interest charges each incurred as a result should be refunded. When I said mistreated, I meant in line with Amigo’s definition.
Idiotic to talk about Amigo “feasting” when they’re not paying out any complaints redress AND they’re in the process of asking financially excluded customers who they have mistreated to take a huge haircut (and whatever the numbers in the new scheme, it will still be a massive haircut).
Some shareholders are their own worst enemy.
Cjmarritt - Amigo has a large loan book precisely because it has routinely lent to people it shouldn’t have done. Amigo acknowledges that it will be upholding 65% of claims!
Yes, any company can apply for a scheme under the law. But surely you’re not suggesting schemes are run of the mill? And not all companies are regulated by the FCA, who has to think about the regulatory implications of a scheme. Schemes are an admission of major viability failure.
And schemes don’t automatically come with a complaints moratorium from the regulator. Provident didn’t get a moratorium when it went for a scheme. The moratorium is a highly unusual and - given it looks like it’ll be in place for over a year - completely unjustifiable competitive advantage, sponsored by FCA.
And this scheme is further highly unusual in that it’s origins are in the unfair and harmful way Amigo has systemically treated its customers. This isn’t a high street retailer in trouble due to structural economic changes or the impact of Covid. Amigo needs a scheme because of its own practices - it’s now beyond dispute that Amigo has unfairly taken hundreds of millions of pounds out of the pockets of customers it keeps telling us are financially excluded. If this was a ‘normal’ situation, the judge wouldn’t have overturned a 95% creditor vote in favour.
It might suit lots of shareholders to gloss over these facts. The whole thing is a clusterf***, which is why I sold up over a year ago at the first mention of a scheme.
If I do defend the FCA, it’s at the margins and it’s because I think Amigo itself is the author of this situation. But happy to be clear about my views of FCA here. Overall, I think the FCA has had an absolute shocker - they’ve been slow, indecisive, and toothless. Their interventions have been too little too late.
If I were one of Amigo’s competitors also feeling the strain of high levels of complaints, I would be asking very loudly why I couldn’t also have a year of not paying redress to valid complaints. This FCA approved moratorium is a massive and disgraceful competitive advantage for Amigo. Plenty of other firms have already gone bust without being given that advantage (I speak as a former holder of some of that stock).
Shareholders SHOULD be bottom of FCA’s priorities - that’s where they sit in insolvency. But shareholders don’t seem to realise how good they’ve got it from FCA. For the last 11 months, it has allowed Amigo to stockpile cash that isn’t theirs via the complaints moratorium. Loan repayments are being made to Amigo (often by borrowers with valid claims) but customer redress payments aren’t going out.
Amigo would be bust if it weren’t for FCA giving Amigo such ridiculous special treatment that no other firm is getting the benefit of. Amazed shareholders aren’t singing FCA praises!
Before you **** off the FCA too much, remember Amigo would already be sunk if it weren’t for the moratorium on complaints. I would be showering FCA with gratitude if I were a shareholder.
If anyone is to blame for the SOA1 shambles it’s the BoD. Even with advanced notice of FCA objections, they couldn’t demonstrate that their central proposition - the scheme or bust - was true in court and yet they seemed to expect the judge to wave it through. They don’t deserve to still be in business - it’s only FCA leniency that has protected them.
What does the RNS mean by organic cash flow?
There doesn’t seem to be anything “organic” about Amigo’s cash flow. It’s completely illusory as it stems from two very favourable (for cash flow) and unusual events. First, there being no lending. Second, the FCA moratorium on complaints.
Take either of those two factors away and cashflow would look very different. I do hope this isn’t more misleading from the new management team.
Cjmarritt - I will say it till I’m blue in the face but I have nothing to do with debt camel or with any CMC. I’ve never met or spoken to Sarah. I’m not responsible for or especially familiar with debt camel or cmc actions. But - again - when a firm gets things as systemically wrong as Amigo has done, of course CMCs and consumer groups will encourage customers to submit a claim. And Amigo itself says TWO THIRDS will be upheld. Spurious claims are a side issue at most. The problem is Amigo’s practices. I understand why shareholders want to overlook that but the fact remains, however inconvenient.
Tinsel - I’m not aware that FOS has changed its approach but I agree it’s criteria are not as transparent as FCA rules. Can you provide any evidence that it’s approach has changed? I don’t think complaint numbers on their own show that. If they are upholding on rules that didn’t exist at the time, then that would be strong grounds for judicial review. Yet Amigo has stepped away from that course of action. So did Wonga. And Brighthouse. And Provident, Buddy, QuickQuid, Sunny, Money Shop. Very hard to believe all those firms would go bust without challenging FOS if there was a realistic prospect of success. On that basis, I’d say FOS is probably in the right place.
Yes please, if you don’t want to hear from me, please do filter - best all round.
Cjmarritt - “Amigo was paying out claims to people that where due refunds”
Total garbage! More ill informed comment not supported by facts. The FOS is upholding 80%+ of complaints - that wouldn’t happen if Amigo was paying what it’s due.
All very easy for shareholders to point the finger at CMCs but when firms misbehave as badly as Amigo has done, of course CMCs will be interested. And - reality check - they’re winning the vast majority of complaints they submit.
JWD - I didn’t realise they were serious questions given the starting points are way off. But here goes.
No I don’t want to see Amigo fail. But if it can’t come up with a scheme that makes a serious attempt to repay customers as much as possible, including by generating value from shareholders and execs, then that’s exactly what should happen. Scheme 1 (as I’ve been saying for months) was a travesty in the way it protected shareholders.
The only serious point you make is about employees. As much as I would hate to see anyone lose their job, far bigger companies have been allowed to fail (including 140 year old Provident with 2000+ employees, Brighthouse with 2,400 employees, Wonga with 500) when they can’t stand on their own two feet. Amigo deserves no special protection and should be no exception. I wish anyone who loses their job well and I’m pleased the job market seems very buoyant at present.
As I said, it’s fantasy to say Amigo’s collapse would cause misery for customers. Amigo hasn’t been lending for 18 months so anyone who needs credit wouldn’t notice its disappearance. Yes a few people would lose redress - but a few hundred pounds at most. Whilst it’s a decent sum, it’s not life changing and if it wasn’t paid, it wouldn’t cause misery. If you think the loss of 10p in the pound will cause “misery” (drug dealing and prostitution etc) how do you justify the 90p loss already proposed as part of scheme 1.0?
So I think your analysis of the risks facing customers of Amigo folding is extremely overblown in a self serving way and I think you conveniently fail to acknowledge that even under the scheme, customers will face far bigger losses (90p per pound) than the relatively small additional loss they’d suffer if Amigo collapsed.
I think that’s answered your questions. How about answering mine? Go on…
Four days and still no meaningful answers…
Maybe JWD, who expressed such concern for employees and borrowers would like to share his views about what level of hit he’s prepared to take?
Or perhaps one of the YouTube crowd could kick things off?
Nice little collection of YouTube links (yawn). But back to the essential question for those expressing such concern for employees and borrowers. What level of dilution should shareholders accept in order to keep Amigo afloat?
Four days and no responses…
Careful, you’re starting to sound like a bleeding heart with all this concern for customers and employees! I’m sure the value of your own holding is purely a side issue!
Simple question for you - if you care so much about claimants and employees, what kind of equity dilution are you prepared to accept?
Whether claimants get 1p or 2p or 5p in the £ is neither here nor there. It’s a difference of a few hundred quid at most. Yes, it’s not insignificant to some claimants but it’s not life changing to any of them.
Amigo hasn’t lent in any volumes for 18 months so no borrowers would find access to credit limited if they collapsed tomorrow.
Yes of course I have sympathy with employees. But firms a lot bigger than Amigo collapse every day and the job market is pretty robust at the moment. 300 jobs is not a good reason to prop up a failed firm and line shareholders and execs pockets at the expense of vulnerable customers.