Evil Diaries: The cost of legal delays

Newbies are brought up to speed on Amigo (AMGO): AMGO lent money at high rates of interest (by no means the highest) to borrowers who had met legal requirements to be informed. These borrowers had their loans guaranteed by guarantors who were acceptable to AMGO. Here AMGO fell into a heffalump trap in that AMGO failed to go through matters properly with the guarantors. No doubt AMGO reckoned that the two layers of sources of funds would see AMGO through. In the event, AMGO was compelled to repay any money they had received from both debtors and guarantors turning them into creditors of AMGO.

This left AMGO insolvent and the need to reconstruct through a Scheme of Arrangement. Although AMGO had canvassed these creditors (many of whom must have felt uncomfortable to be so fortuitously reclassified) and got their agreement to the Scheme.

However, the FCA had and has a duty to speak on behalf of creditors. And, come the High Court hearing in May 2021, prevailed in calling for Mr Justice Miles to rule against the Scheme on the grounds that it was insufficiently generous to creditors. Thus AMGO found it necessary to go on paying public company overheads and much else besides whilst doing no business.

Yesterday AMGO announced interim results which, much to my surprise, showed a small profit. Where there is light there is hope. Further, the CEO announced that he expected to get a revised deal agreed with creditors and thus ensure that the FCA would back off and that the Scheme would be approved. Needless to add these delays have been economically disastrous.

Despite this, I reckon that the constant warnings of insolvency to come should be ignored and, in pursuit of this dream, I bought a further 500,000 AMGO at 8.75p (there is 0.5% stamp duty to pay – AMGO is NOT AIM listed). Fingers crossed.