Discretionary Commission Arrangements - Compaints and refunds

Amigo Scheme of Arrangement

Amigo Loans Update 

The following information has been taken from Amigo's site at https://www.amigoscheme.co.uk/

Scheme Progress Update - 27th February 2024 

We apologise for the delays in the claim process. This has been driven by both the unexpected volume of claims and the complexity of redress calculations. To date, we have issued over 184,000 outcomes in the form of Final Response Letters to customers, representing approximately 88% of total claims.

We anticipated that all responses would be issued by the end of January 2024, however, the remaining work and complexities in assessing and calculating certain claims, especially for those with outstanding loan balances, has taken longer than expected.  Based upon current projections, we will have issued over 95% of all responses by mid-March 2024, with the remainder being issued at the start of April 2024. Again, we apologise for any inconvenience that the delay has caused. 

We anticipate that the refund (in full) of loan payments made by customers to Amigo, either before (in certain circumstances) or after the Scheme Effective Date (26 May 2022) and where their Scheme Claim has been upheld, will commence later this week. Scheme Creditors would have been notified in their Final Response letter if they were eligible to receive this type of refund in full. Further details regarding this can be found in our FAQs. If you haven’t yet done so, we encourage Scheme Creditors to check that their bank details registered in the Scheme portal are accurate and up to date.

We anticipate making two redress payments (pence in the £) to customers, one commencing in April or May 2024, and then a final payment approximately 6 months later, once there is certainty around the timing of Amigo’s liquidation. We remain in discussions with the Scheme Supervisor regarding the timing and level of payments and will provide additional updates and information in due course. We are confident, at this stage, that total Scheme redress payments will not be less than 17.p.

In November 2023, we updated credit records for customers with either a full or partially upheld claim, which removed any reference to an upheld agreement. In December 2023, we stopped automatic collection of any future payments from customers whose Scheme outcome is likely to be fully or partially upheld and where redress will likely exceed the amount owing on their outstanding loan. This process continues to be in place whilst we process the remaining outcomes.

The adjudication (claim dispute) process remains in place for anyone dissatisfied with their outcome. The Independent Scheme Adjudicator has provided clear guidance on the evidence they expect a customer to provide if choosing to dispute the original outcome. This information can be found under Section B of our Frequently Asked Questions.

Answers to Frequently Asked Questions and key contact points can be found here.

What is a Scheme of Arranagement

A Scheme of Arrangement is a legal procedure under UK corporate law that allows a company to restructure its debt, reorganize its share capital, or achieve an amicable takeover with the approval of its shareholders and the sanction of the court. It is a versatile and flexible tool outlined under the Companies Act 2006, and it can be used for various corporate purposes, including but not limited to, mergers and acquisitions, refinancing, and restructuring to avoid insolvency.

The process involves the company proposing a scheme, which must then be approved by a requisite majority of the affected class(es) of shareholders or creditors (usually at least 75% in value of the creditors or shareholders present and voting) and then sanctioned by the High Court. The scheme is binding on all affected parties if these conditions are met, regardless of whether all of them have voted in favor.

When a company like Amigo enters into a Scheme of Arrangement, it's typically aiming to restructure its financial obligations to ensure its survival, often as an alternative to more severe insolvency procedures like administration or liquidation. The context for such companies is usually one where they face significant financial distress, potentially unable to meet their debt obligations, and are seeking an orderly way to restructure those obligations with their creditors' agreement.

Steps in a Scheme of Arrangement

  1. Proposal: The company drafts a proposal for the Scheme of Arrangement, detailing how it plans to reorganize its affairs, debts, or share capital.

  2. Court Approval for Meeting: The company applies to the court for permission to call a meeting of the creditors or members (or classes thereof) who will be affected by the scheme.

  3. Meeting: Affected parties are divided into classes and meet to vote on the scheme. Approval requires a majority in number representing 75% in value of the creditors or members present and voting in each class.

  4. Court Sanction: Following approval by the requisite majority, the scheme must be sanctioned by the court. The court will review the scheme to ensure it is fair and equitable to all parties involved.

  5. Implementation: Once sanctioned by the court, the scheme becomes effective and binding on all parties, including those who did not vote or voted against the proposal.

Case of Amigo

For a company like Amigo, which operates in the financial services sector offering guarantor loans, entering into a Scheme of Arrangement might be driven by the need to manage its debt in light of financial difficulties, regulatory challenges, or compensation claims from customers. While specific details about Amigo's scheme would depend on the circumstances leading to its proposal, the goal is typically to restructure debt in a way that allows the company to continue operating while providing a mechanism to pay back creditors over time under revised terms.

This could involve altering the terms of existing debts, issuing new shares, or even arranging for the disposal of certain assets to generate funds. For creditors and shareholders, the scheme offers a structured and court-approved process that aims to maximize their returns, potentially avoiding the lower recoveries associated with insolvency proceedings.

Schemes of Arrangement are complex legal processes requiring detailed preparation, negotiation, and legal oversight, reflecting the company's commitment to finding a viable path forward in consultation with its stakeholders.