Wonga is on the brink of collapse after a surge in customer compensation claims.
The payday loans firm was once one of the fastest-growing consumer finance companies in Britain.
It even had ambitions to get a New York stock market listing that could have valued it at more than $1billion.
But the company is now on the rocks just three weeks after being given an emergency £10million cash injection to stay afloat.
Wonga is on the brink of collapse after a surge in customer compensation claims (pictured: the firm’s TV advert)
Wonga, launched in 2007, is chaired by former insurance boss Andy Haste
In 2014 the Financial Conduct Authority introduced a cap on the cost of short-term credit for consumers.
This sparked claims from those who had borrowed from Wonga at astronomical annual interest rates of up to 5,853 per cent before the new rules came into effect.
A fresh influx of compensation demands from claims management companies – which help customers get compensation in exchange for a cut of the payout – was triggered after the £10million cash injection went public.
Claimants can seek compensation if Wonga treated them irresponsibly – for example, by repeatedly giving them loans they were clearly struggling to pay back.
Wonga has lined up professional services firm Grant Thornton to act as administrator if it is not able to swerve insolvency, Sky News report.
Executives from the firm are said to have been in talks with the Financial Conduct Authority to discuss its options.
Its administration process may be similar to the one used by House of Fraser, which would involve a buyer acquiring some of Wonga’s operations.
A portion of the company’s 500-strong workforce could be preserved under this process.
Wonga has reportedly lined up professional services firm Grant Thornton to act as administrator if it is not able to swerve insolvency
Wonga previously raised its profile by sponsoring Newcastle United (players pictured with firm’s logo on their shirts)
Wonga, launched in 2007, is chaired by former insurance boss Andy Haste.
It is owned by big names in the venture capital industry including Balderton Capital, Accel Partners and 83North.
It was made to set up a £2.6million compensation scheme in 2014 when it emerged up to 45,000 customers were sent threatening letters from a fake law firm invented by Wonga staff.
The company previously raised its profile by sponsoring Newcastle United and continues to trade in countries including South Africa and Spain.
Despite losing about £65million in 2016, it had been targeting a return to profitability in 2017.
It is not clear whether this was achieved as figures have not yet been published.
Controversy over short-term lending led the firm to introduce a flexible loan product to improve its image.
The board had been targeting a return to profitability this year.
Record £11billion card splurge
Credit card spending has hit a record high amid fears that households are living beyond their means.
Shoppers spent £11.1billion on plastic in July, the highest monthly figure recorded by the industry body UK Finance.
Its report showed Britons now owe £44.1billion on credit cards with the major banks, up 5.3 per cent on last year.
The figures also show we are saving less, with growth in savings slowing to a record low of 1.2 per cent last month.
James Daley, of the campaign group Fairer Finance, said: ‘There are households carrying too much debt and cannot afford to repay it. It is a concern.’