Slaughter and May advising as Wonga enters administration
Payday lender falls into administration following customer compensation claims
August 31, 2018 at 04:01 AM
2 minute read
Slaughter and May is advising Wonga Group as the beleaguered payday lender collapses into administration.
The move into administration was confirmed yesterday (30 August) after weeks of uncertainty over the company's future.
Slaughters is also expected to be appointed to act for the administrators, Grant Thornton, once it takes over management of the company.
The magic circle firm has been fielding a team led by head of corporate Andy Ryde, with support from restructuring and insolvency partners Ian Johnson and Tom Vickers, financial regulation partner Jan Putnis, and associates Audrey Pitcher and Josh Bauernfreund.
The Wonga Group – which consists of Wonga Worldwide Limited, WDFC Services Limited as well as WDFC UK Limited (better known by its trading name, Wonga.com) – offers short-term, unsecured loans at high rates.
The move into administration comes after the company received a deluge of customer compensation claims. It sought emergency financial backing from shareholders earlier this month, with £10m being pumped into the business.
The collapse marks the culmination of a number of controversies that the payday lender had failed to weather. In 2014, the FCA reprimanded the company and fined it £2.6m after it wrote to customers who were in arrears using letters addressed from fake law firms 'Chainey, D'Amato & Shannon' and 'Barker and Lowe Legal Recoveries'.
Ryde and Putnis previously advised Wonga on its 2014 voluntary agreement with the FCA that saw £220m of debt written off the lender's bottom line.
In a statement, Wonga said: "A decision has been taken to place Wonga Group Limited, WDFC UK Limited, Wonga Worldwide Limited and WDFC Services Limited into administration. The boards of these entities have assessed all options regarding the future of the group and have concluded that it is appropriate to place the businesses into administration."
It added that the UK business will not be accepting any new loan applications.
The FCA said in a statement: "We will continue to supervise Wonga once it is in administration and are in close contact with the proposed administrators with regard to the fair treatment of customers."
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