Listed home loan provider Morses Club has warned that the business ‘continues to be materially loss-making’ and stressed the need to complete its planned plan of arrangement to deal with customer complaints.
The Batley-headquartered business is pursuing the use of a plan of arrangement under Part 26 of the Companies Act 2006 to deal with customer claims for unaffordable loans against the company .
It suspended the processing of all new claims for unaffordable loan relief from August 11 in the Home Collected Credit division; however, his trade performance continued to be affected by the level of claims in the division made prior to August 11. This means that the company continues to be significantly loss-making, with the added impact of limiting the cash available to generate future income.
This has led to a reduction in loan volumes and the number of customers in the HCC and Digital divisions to ensure Morses Club can continue to operate as a going concern.
The number of digital division customers for short-term and long-term lending products has declined 37% year-to-date, with a 19% decline to around 116,000 in the HCC business.
Gary Marshall, Managing Director of Morses Club, said: “The level of past claims in our HCC division continues to impact the overall business performance of the business which means we are losing significantly as a result and have l additional impact of limiting cash available to generate future income.
“While the business continues to be a going concern, the material uncertainty of the Group’s business position means that it is increasingly imperative that we make substantial progress on any Scheme of Arrangement.
“We continue to suspend the processing of customer complaints received from August 11 in accordance with DISP 1.6.2R(2). We continue to work with all of our key stakeholders to make formal progress on a potential Scheme of Arrangement, to avoid the business having to seek insolvency protection, which would lead to a significantly worse outcome for customers.”