Payday lender Wonga to be wound down after collapse

The payday loan TV advert run by Wonga
The payday loan TV advert run by Wonga
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Payday lender Wonga will be wound down following its collapse into administration.

The controversial company called in administrators Grant Thornton yesterday after being hit by a surge in people making compensation claims over historical loans.

Grant Thornton said today it was carrying out an “orderly wind down of the business”.

It added: “There will be no new lending activity.

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“The administrators will conduct an orderly wind down of the business and sale of the assets and start the process of identifying all creditors, in accordance with their statutory obligations.”

Grant Thornton also said while customers with mis-selling compensation claims should continue to approach the company, they will be “dealt with as unsecured creditors”.

This means they will sit behind secured creditors when Grant Thornton doles out the proceeds from the Wonga asset sale and are unlikely to receive a full payout.

The City watchdog, the Financial Conduct Authority, declined to comment on the matter.

Grant Thornton confirmed all outstanding loans must be repaid in the same way as usual.

Existing borrowers are thought to total around 220,000. The accountancy firm is running Wonga’s circa £400 million loan book.

Wonga’s collapse came just weeks after shareholders pumped £10m into the lender in a bid to save it from going bust.

Investors in Wonga included Balderton Capital, Accel Partners, Greylock Partners and 83North.

Earlier this month, Wonga said its struggles were due to a “significant” increase industry-wide in people making claims in relation to historical loans.

The lender blamed claims management companies for the rise.

Wonga has faced a barrage of criticism over the high interest it charges on its loans and it has been accused of targeting those who are vulnerable.