A scheme to repay customers to whom Amigo Holdings wrongfully sold high interest loans was approved at a High Court hearing today.

The decision represents a massive victory for the embattled lender, whose survival has remained in question for the past two years following a slew of complaints from people who believe the firm sold them loans they didn’t. could not repay.

It also means creditors are in line to receive at least £112m between them, including £15m from a share issue, although it could rise to £116m if they lift more than planned.

Customers had already voted overwhelmingly in favor of the proposal at a meeting 11 days ago, while the Financial Conduct Authority (FCA) said it would not attend the hearing to oppose or declare evidence regarding the scheme.

Ahead of today’s hearing, trading in Amigo Holdings shares was suspended due to concerns that the limited capacity of those attending the proceedings could lead to the leaking of sensitive information to the market.

Investors should soon be able to start buying shares in the group again, although Amigo still needs FCA clearance to start lending again, which it has not done since November 2020.

Amigo chief executive Gary Jennison said the court’s decision “would allow creditors to maximize their Amigo repair payments.”

He added: “While we need to get FCA clearance to resume lending and raise new capital, the court’s decision is good news for creditors, customers and employees, and it brings us closer to the end. compensation and draws a line under the mistakes of the past.

If the decision had gone against Amigo, the company would then have asked the judge to accept an alternative offer known as a “fallback solution”, which was also approved by a majority of loanees on May 22.

Such a proposal would have seen him stop lending, pay all necessary expenses and return excess cash to creditors before eventually being liquidated.

It would have marked a dramatic downfall for the company, which specializes in offering loans to those with poor credit scores as long as they have a ‘guarantor’ – usually a family member or friend – who could pay the bill if the creditor was unable to do so.

This business model was the subject of major controversy as Amigo lent money to customers at interest rates of up to 49.9%, leading some MPs to describe the group as a “legal usurer”.

The business has often been compared to payday lender Wonga, whose collapse in 2018 followed a spike in compensation claims and an FCA investigation that found it lent to people who didn’t. did not have the ability to repay.

However, demand for Amigo’s loans has continued to grow and it was valued at £1.3bn when it floated on the London Stock Exchange in 2018, making its founder James Benamor one of the youngest. UK billionaires.

Since then, shares of Amigo Holdings have fallen more than 97% and its current market capitalization is now worth less than £30m.