Sub-prime lender Amigo has said it faces insolvency without a new plan to cap payouts to customers who were mis-sold loans.
A proposal to set aside a separate pot of money for compensation was thrown out by the High Court a week ago.
Now Amigo has said it will not appeal against that decision and was, instead, investigating all options - including an alternative plan, or insolvency.
In the meantime, all compensation payments remain on hold.
Amigo has 150,000 current customers, and 500,000 past customers who are often cash-strapped and are required to give the name of a guarantor to step in to cover any unpaid repayments.
It is the biggest operator in the market but its future has been in doubt for some time, having also been embroiled in a boardroom battle. It stopped all new lending in November.
The company, as with many others in the sub-prime lending sector, has faced a blizzard of complaints from customers who believe they were approved for loans which they could never afford to repay. A host of these complaints have come via claims management companies.
The regulator says that a loan is unaffordable if making the repayments means someone has to borrow more money or get behind with essential bills.
Amigo said it wanted to cap any unfinished or subsequent complaints in what is known as a scheme of arrangement.
This was opposed by the City regulator, the Financial Conduct Authority (FCA), and a judge said he was "not satisfied that the court should sanction the scheme".
Amigo said it would now work with the FCA in the coming weeks.
Chief executive Gary Jennison said: "Without a scheme, Amigo faces insolvency as it will be unable to satisfy its customer compensation claims as well as meeting the legally binding funding obligations owed to its secured creditors. The board is committed to finding the best solution it can for Amigo's customers."
It said that "to ensure equal treatment of customers with redress claims", compensation would continue to be put on hold "until further notice".
But Sara Williams, who has been following the case on her Debt Camel blog, said it was unfair that halting payments only worked one way.
"Amigo won't pay refunds but it expects customers who have a complaint in to carry on paying their monthly loan repayments," she said.
"If Amigo wants to halt deciding complaints and paying refunds, it should allow the customers too to halt payments until their complaint is decided. I think the FCA should insist on this to protect the customers."
The company would also be delaying the publication of its results for the last financial year.
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2021-06-01 08:53:03Z
CBMiLGh0dHBzOi8vd3d3LmJiYy5jby51ay9uZXdzL2J1c2luZXNzLTU3MzE0NTE30gEwaHR0cHM6Ly93d3cuYmJjLmNvLnVrL25ld3MvYnVzaW5lc3MtNTczMTQ1MTcuYW1w
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