British payday lender Wonga has decided to file for administration in the UK following a deluge of customer compensation claims.
The company in a statement said it had decided that the Wonga administration was the appropriate route after assessing all options.
The statement read: “A decision has been taken to place Wonga Group Limited, WDFC UK Limited, Wonga Worldwide Limited and WDFC Services Limited into administration.
“The boards of these entities have assessed all options regarding the future of the group and have concluded that it is appropriate to place the businesses into administration.”
However, Wonga’s overseas businesses in Poland, South Africa and Spain will not be part of the administration.
The company had already stopped accepting new loan applications before the Wonga administration and appointed Grant Thornton as administrators.
“Customers can continue to use Wonga services to manage their existing loans but the UK business will not be accepting any new loan applications,” the statement added.
Commenting on the development, British banking watchdog, the Financial Conduct Authority, said it would continue to supervise Wonga and seek fair treatment for customers.
“Customers should continue to make any outstanding payments in the normal way. All existing agreements remain in place and will not be affected by the proposed administration,” the regulator added.
The collapse of Wonga is expected to puts approximately 500 jobs at risk.
The new comes days after a consortium of high-profile technology investors made emergency cash injection of £10m to keep the company afloat.