- Britain’s FCA imposes an Asset Voluntary Requirement on Amigo Holdings.
- The subprime lender is embroiled in a row with its founder James Benamor.
- The British fashion retailer Boohoo Group plc says it will hire a new auditor.
The British financial watchdog imposed an Asset Voluntary Requirement (AVR) on Amigo Holdings (LON: AMGO) on Monday. Under the new restriction, the subprime lender must receive approval from the regulator before transferring assets out of the company.
Amigo Holdings was reported about 25% down in premarket trading on Monday but recovered the majority of its intraday loss on market open. On a year to date basis, shares of the company are now close to 85% down in the stock market.
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Amigo is embroiled in a row with its founder
AVR also makes Amigo liable to seek approval from the watchdog before it can make dividend payments to shareholders or bonus payments to its executives. The past 18 months have been a rough patch for the British firm as it faced regulatory probes and embroiled in a row with its founder, James Benamor.
Benamor demanded to be reinstated as the Group’s chief executive but lost a shareholder vote in September.
Amigo Holdings offers loans to borrowers that fail to receive one from mainstream lenders, as long as a third-party is willing to serve as a guarantor. The Financial Conduct Authority (FCA) of the United Kingdom is currently investigating the subprime lender over how it evaluates the creditworthiness of the borrowers that it serves.
In its financial report published in August, Amigo reported a 32% decline in revenue in the fiscal first quarter and a much broader 83% decline in profit. On Monday, the British company expressed confidence in its liquidity that it said was sufficient to fund operations amidst the COVID-19 crisis that has so far infected more than 0.7 million people in the UK and caused over 43 thousand deaths.
Boohoo Group to hire a new auditor
In separate news from the UK, Financial Times said on Friday that PwC had resigned as the auditor of Boohoo Group plc (LON: BOO) due to the supply chain scandal that brought the fashion retailer under heavy fire earlier in 2020. Boohoo Group plc confirmed that it had started looking for a new auditor on Monday but rejected claims that PwC had already parted ways.
According to Boohoo:
“PwC has not resigned as auditor to Boohoo, but a process has recently commenced to tender for a new provider of audit services.”
The £3.47 billion company that has a price to earnings ratio of 40.13 is currently about 8% down year to date in the stock market.
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