The company behind Amigo Loans has been given an extra three-month lifeline from its lender as the business tries to stave off collapse.
The guarantor lender said that its bank had extended the grace period it had given Amigo to September 24. The waiver was set to run out on Friday.
During this period the bank will not take action if Amigo breaks the conditions attached to the so-called securitisation facility.
The amount available to Amigo through the facility was also slashed to £100 million from £250 million.
Weighed down under a slew of customer complaints, Amigo has been fighting for months to stay above water.
The lender warned that it still faces insolvency after a High Court decision to reject its plan to get out of the crisis.
Amigo’s rescue scheme would have handed smaller-than-expected compensation packages to customers with historical complaints.
Earlier this month, after the decision, the business said that it faces insolvency as it is unable to pay all the compensation claims while also meeting its obligations to lenders.
On Friday Amigo said it is in talks with the City watchdog, but that insolvency is still an option.
“Following the recent High Court judgment relating to Amigo’s proposed scheme of arrangement, the board of Amigo has reviewed options with the Financial Conduct Authority and discussions are ongoing,” the business said.
“This could result in a revised scheme of arrangement or insolvency.”
The waiver on Amigo’s facility has been extended several times. An initial extension from July to December last year was meant to give it and its lender time to figure out what impact Covid would have on the business.
It later extended this again to June 25 this year, before deciding it needed yet another extension.
The business said: “All cash generation arising from customer loans held within the facility is restricted and will continue to be used during the extended waiver period extension to further reduce the outstanding balance of the facility. As of the date of this extension, the facility was drawn at £27 million.”