Amigo (No. 2)

The court granted directions to convene simultaneous scheme meetings under Part 26 of the Companies Act 2006 to consider two alternative schemes (the New Business Scheme and the Wind-Down Scheme) proposed in respect of customer "Redress Claims" and an FOS fee claim arising from alleged mis‑selling by Amigo group companies.

The judge identified and resolved key convening-stage issues: there was no obvious jurisdictional "roadblock" to including releases of Amigo entities and their personnel in a deed of release to be executed by Scheme Supervisors; the proposed class composition (customers with Redress Claims and the Financial Ombudsman Service in respect of its accrued fee claim) was appropriate and required no subdivision; the draft explanatory statement was, in form, sufficiently comprehensible for the intended audience; and voting entitlements (including a nominal £1 vote for current borrowers who are net debtors) were appropriate by reference to the comparator of an insolvent administration.

The court also approved certain practical directions: meetings to be held remotely, explanatory material to be provided by email and online with hard copies on request, publicity by newspaper and social media, and specific voting rules and a six‑month claims "Bar Date". In consequence the order convening the meetings was made.

This is a first instance convening hearing. ALL Scheme Limited (SchemeCo) applied for directions to convene meetings under Part 26 of the Companies Act 2006 to consider two alternative schemes arising from large numbers of customer complaints and claims for mis‑selling of guarantor loans by Amigo group companies (principally Amigo Loans Ltd). The Schemes aim to compromise customers' "Redress Claims" and the Financial Ombudsman Service's (FOS) accrued fee claim to achieve a better outcome than an insolvent administration.

Background and parties:

• ALL has made c.927,000 guarantor loan agreements and has c.81,000 outstanding loans. A provision of £347.5m had been made for Redress Claims as at 31 December 2021.
• SchemeCo, a special purpose vehicle, has executed a deed poll assuming joint liability for the relevant liabilities of ALL, Holdings plc and AM S L for the sole purpose of promoting the Schemes.
• Two alternative schemes were proposed: the New Business Scheme (NBS), which envisages resumption of lending and includes Preferred and Fallback Solutions, and the Wind‑Down Scheme (WDS), which envisages winding down the business. Both include a Scheme Fund, a Scheme Adjudicator process for claims and a deed of release to be executed by Scheme Supervisors.

Nature of the application: directions to convene simultaneous meetings to vote separately on the NBS and the WDS, and associated directions on class composition, explanatory materials, voting rules, meeting format and other procedural matters.

Issues framed by the court:

• whether there is any obvious jurisdictional "roadblock" to including third‑party releases effected through SchemeCo and the proposed Deed of Release;
• how to compose classes for voting;
• whether the explanatory statement was sufficiently intelligible for the creditor body;
• appropriate voting entitlements for different categories of customers (including current borrowers who remain net debtors); and
• practical directions for convening and holding the meetings (remote format, publicity, Bar Date, adjudication process).

Court's reasoning and findings:

• On third‑party releases and the use of SchemeCo, the court followed the approach in recent authorities that there was no obvious roadblock at the convening stage: jurisdictional and discretionary issues could be addressed fully at the sanction stage.
• Class composition: the court concluded that all customers with Redress Claims and the FOS in respect of its accrued fee claim could sensibly form a single class because their rights (measured against the alternative of administration) were sufficiently similar and would be determined under a common adjudication and bar date process.
• Explanatory statement: the draft document, drafted in plain language with question and answer sections and flow charts, was satisfactory in form for the intended audience; a help‑desk and a Customer Advocate had been appointed and would assist customers.
• Voting entitlements: values for voting were fixed by reference to the likely amounts recoverable under Redress Claims (including 8% simple interest). Current borrowers who are net debtors would receive a nominal £1 vote, reflecting their position in the administration comparator.
• Practical directions: meetings were ordered to be held online with explanatory materials circulated electronically and advertised via newspapers and social media; a six‑month Bar Date for claims was included; the court required amendments to clarify a previously uncertain cut‑off for loan recoveries forming the NBS "Turnover Amount", and those amendments were made.

The court therefore made an order convening the scheme meetings and giving the directions discussed at the hearing.

Order made convening simultaneous scheme meetings to consider the New Business Scheme and the Wind‑Down Scheme; the court found no obvious "roadblock" to inclusion of third‑party releases at the convening stage, approved the single class composition for customers and the FOS claim, found the explanatory statement acceptable in form, and gave directions on voting entitlements, meeting format (remote), publicity and the Bar Date. Those procedural directions were granted to permit the scheme meetings to proceed.