Like Amigo, Provident has seen complaints soar during the pandemic though in its case it has been its 140-year old doorstep lending business that has caused the problems.
Provident has proposed a run-off scheme similar to Amigo’s to limit the damage to the rest of the business.
But with the court rejecting Amigo’s plan, analysts expect Provident to amend its proposal.
Shore Capital notes that Provident’s scheme is due to go to a creditor vote on 19th July and, if approved, will then progress to a final court sanction hearing on the 30th July.
The decision by the Court not to sanction Amigo’s Scheme may therefore embolden creditors to vote against the Provident Scheme, suggests the broker.
That means Povident has to make a decision as to whether it should pursue the Scheme in its current form or seek to modify it, possibly by increasing the level of contribution it is making to the Scheme from the current £50m plus admin costs of £15m.
If Provident’s scheme is not approved, the group has indicated it will be put into administration, which while financially not much different from the cost of the run-off scheme would have greater reputational implications for the business, Shore believes.
Shares in Provident dropped 6.5% to 242.2p.