Cash-strapped Wonga enters UK administration – TechCrunch
Update: That’s all for Wonga’s British business. The besieged payday loan company has just confirmed that it has been placed in receivership. Although he says his overseas businesses continue to trade, at least for now.
A company spokesperson emailed us the statement below:
A decision was taken to place Wonga Group Limited, WDFC UK Limited, Wonga Worldwide Limited and WDFC Services Limited under administration.
The Boards of these entities evaluated all the options concerning the future of the Group and concluded that it was advisable to place the activities under administration. Chris Laverty, Daniel Smith and Andrew Charters of Grant Thornton UK LLP are about to be appointed joint directors.
Wonga clients can continue to use Wonga’s services to manage their existing loans, but the UK company will not accept any new loan applications. Customers can find further information on the website (www.wonga.com).
Wonga’s foreign companies continue to trade and are not part of this announcement.
Earlier today, it emerged that Wonga had stopped accepting loan applications from new clients.
The original story follows below …
UK payday loan firm Wonga, whose investors include leading European venture capitalists Accel and Balderton, appears to be on the verge of collapse as it has stopped taking new loans.
A spokesperson for the company confirmed to TechCrunch that it is not accepting new loan requests.
She sent us the statement below which was posted on Wonga’s mobile website (although not visible to us on the desktop site at the time of writing – and it was still possible to try to apply for a loan there, although the page subsequently returned a broken link).
Wonga’s statement reads: “As she continues to assess her options, Wonga has decided to no longer accept loan applications. If you are an existing customer, you can continue to use our services to manage your loan. Click here for more information.”
The spokeswoman declined to comment further on the company’s status, but speculation is mounting that Wonga is on the verge of stepping down.
The Guardian reports that the company had emergency talks with the UK’s Financial Conduct Authority on Wednesday about the impact of its collapse on existing customers.
While the BBC reports the company arranged for Grant Thornton to act as a director.
Wonga has been struggling for a few years after regulators cracked down on the payday lending industry.
In 2014, the company agreed with the financial regulator to write down £ 220million for lending money to people without properly assessing their ability to repay it.
He was further censored for sending bogus letters from lawyers to late-paying clients – and had to pay an additional £ 2.6million in compensation for it.
Wonga has since attempted to reinvent itself – with a focus on flexible loan products – but the costs associated with its legacy behavior have steadily increased.
And earlier this month, it emerged that Wonga’s investors had pumped $ 10 million into the company to fund a growing number of compensation claims related to his past conduct.
In recent times, the company has also sold assets – moving its German payments business, BillPay, to Klarna last year, for around £ 60million.
Prior to the $ 10million investor injection this month, the company founded in 2006 had raised around £ 145.5million in venture capital – from a venture capital chain including Accel, Balderton , Oak Investment, Meritech Capital, 83North, Dawn Capital and HV Holtzbrinck Ventures.
It seems very unlikely that any of them will get their money back.