On 2 November 2018, RSM wrote to creditors of Ariste Holdings, best known for its Cash Genie payday lender brand, saying that it was no longer solvent. As a result, customers expected a refund or compensation will no longer receive the full amount they are due.
Background – Cash Genie was solvent when it stopped trading in 2016
In 2015 the FCA, which regulates payday lenders, ordered Cash Genie to pay more than £20million in compensation to c 92,000 customers, for failings including:
- charging unfair fees, including £50 for referring a customer to its debt collection arm which was part of the same group;
- rolling over loans without the customer’s consent and without making any affordability checks; and
- using bank details given to other companies in the group to recover money.
In January 2016, Cash Genie stopped trading and entered into a “solvent liquidation”. There was expected to be enough money to pay all its creditors, including the customers due compensation.
Since then people who have sent in affordability complaints have been having their refunds paid. This has often been a slow process, with RSM, the administrators, paying out money in cheque runs as the company’s assets were sold. At one point these seemed to be monthly, but no readers here have reported getting any refunds since March 2018.
No longer solvent because of more claims
On 2 November RSM decided that there was no longer enough money to pay all the creditors in full. Their letter to creditors says:
in recent months the company has received a drastic increase in claims.
It seems likely the recent claims were from claims companies and from customers directly following the publicity in August about Wonga and payday loan refunds.
As result there isn’t going to be enough money to pay all the claims in full and the liquidation has been converted into a creditors’ voluntary liquidation.
What will happen if you have an agreed claim
People with an agreed claim are unsecured creditors of Cash Genie. The Administrators will have to divide up the money there is between all the unsecured creditors.
You will not get the full amount of the refund agreed, but there is at the moment no indication of whether you will get 10%, 50% or 90% of this. You may hear this called getting 10p, 50p or 90p in the £.
The administrators are not saying there is no money at all, just you won’t get the full amount.
UPDATE – the administrators now say that they expect to pay 5p in the £ on refunds.
Do you want to vote?
If you have an agreed claim you can vote on appointing RSM as the liquidators. You only have to vote if you disagree – if you don’t vote, it will be assumed you have agreed to the proposals. The deadline is 21 November.
I can’t advise you on how to vote. However, it’s not clear to me that there is a practical alternative to what is being proposed.
If you want to know more about creditors’ committees, read this Guide.
You should submit a proof of debt
All creditors, including people with agreed refund amounts, are being asked to send a form with a proof of their debt to the liquidators, by email or post.
This article Letter from Wonga administrators – do you need to do anything? looks at how to complete the equivalent form for Wonga.
I don’t think it’s urgent that you return this form unless you want to vote, in which case you should return this form at the same time.
There is no indication of timescales at the moment. But you are probably not going to get your refund quickly. The Administrators need to have a complete list of refunds before they divide up the money.
Claims in progress
The administrators have not said how they will handle complaints currently underway but not yet agreed, or new complaints received. But there will need to be a procedure – these early-stage complaints have to be decided before money is distributed.