AMIGO Loans says it is “on the right track” to survive and return to lending after a court gave the go-ahead for a crucial vote of creditors.

Bosses at the Bournemouth-based lender are looking to save the business by capping the compensation it pays to customers who complain of past mis-selling.

A previous proposal was rejected by the High Court last year after the Financial Conduct Authority (FCA) opposed the scheme.

But the authority has not objected to an improved offer which would pave the way for Amigo to begin lending again.

The High Court has now given the go-ahead for the company to convene an online meeting of customers who make up the scheme’s creditors.

The vote could back Amigo's new business scheme, or the alternative of a wind-down scheme which would close the firm.

Amigo chief executive Gary Jennison said: "We are pleased that the court has agreed that the schemes can proceed to a creditor vote. The financial offer has been significantly improved and we will be doing everything we can to encourage creditor participation.

“As we have said many times, significant hurdles remain. Customers must first vote in favour of a scheme. We then require the High Court to approve a scheme in May and, if it is the New Business Scheme, we must satisfy the FCA on a number of conditions before we can return to lending. A significant capital raising must then be completed within a year of the court sanction hearing.

“Compromises and difficult decisions have been required to enable us to offer creditors the best possible outcome in the circumstances and for Amigo to have a future as a regulated lender in an important market segment. The road ahead is not easy, but we are on the right track and today’s court decision is another step forward.”

The High Court was told that Amigo Loans had liabilities estimated at £597million at the end of last year, outstripping its assets by £123m.

Lord Justice Snowden said in his judgement that the business was “balance sheet insolvent” and would “in the relatively near future, run out of cash to pay its current liabilities in full”.

The court heard people with redress claims could receive 41 pence per pound of their claims under Amigio’s new business scheme, with the final payment likely to come in November 2023. If the business went into administration, they could receive 31p in the pound, with a final payment not expected until at least May 2024.

The business has made around 927,000 guarantor loans since January 2005 and had contractual relations with more than a million customers, with around 81,000 outstanding loans.

The judge praised the company for explaining its proposals in “plain language” rather than the “complex and turgid documents which have often accompanied schemes and plans in recent years”.