Amigo Holdings jumped 20% as a judge approved the latest version of its misselling claims compensation scheme.
The guaranteed loan specialist said it was facing bankruptcy if the scheme was not approved, but a judge last night said the scheme would be sanctioned with a full ruling to follow later.
In a statement, Amigo said: “The Board is pleased that the Court has accepted the New Business Scheme is the best option available for redress creditors who are owed compensation because of Amigo's past lending practices. A further update will be given in due course.”
Gary Jennison, Amigo’s chief executive added: "We are pleased that the Court has decided to allow creditors the chance to maximise their redress payments from Amigo.
“While we must secure the FCA's permission to resume lending and raise fresh capital, the Court's ruling is good news for creditors, customers and employees, and it takes us a step closer to delivering compensation as well as drawing a line under the mistakes of the past.”
Amigo had its original scheme thrown out by a judge a year ago on the grounds that not enough money was going to the claimants.
As a result, it proposed two “distinct schemes” in December, with its Independent Customer Committee plumping for the ‘New Business Scheme.’
The scheme should provide creditors with greater returns than the alternative ‘Wind-down Scheme,’ though it is contingent on a resumption of lending and Amigo completing a successful equity raise.
Through the scheme, claimants will receive £97mln from Amigo’s existing funds alongside £15mln from new equity.
The initial cash contribution compares to up to £35mln proposed in the original scheme that was thrown out.
Shares today were up 1.2p at 7.5p.