The Money Shop, which used to specialise in payday loans but more lately into pawn broking and buying gold, has stopped trading with immediate effect and has launched a mass redundancy programme. The company, Instant Cash LoansLtd trading as The Money Shop, has had its fair share of problems in the last few years. It was fined £15m back in 2015 when the FCA clamped down on Payday Lenders. It was fined for poor affordibilty checks.
In a letter to employees, informing them of redundancies, it said its problems were "' A result of the unprecedented number of customer complaints received by the business, from claims management companies which relate to previous behaviours and conduct of the business towards its customers, pre FCA."
The company is now trying to find a buyer for its loan books.
Although not in liquidation, closing immediately was probably the correct thing to do in the circumstances if it was obvious that the company had no future. The multiple claims against it would make it in effect "contingently insolvent" . It may not have much in the way of creditors but continuing to trade may have been risky for the directors personally.