Payday lender has run out of cash
The Cash Store, one Australia's largest payday lenders with 61 stores, has gone broke and appointed a voluntary administrator to work out how to repay its debts.
The announcement comes less than a week after the Australian Securities and Insurance Commission asked the Federal Court to fine the company millions of dollars for alleged breaches of the credit act.
ASIC claimed the company, which charged as much as 240 per cent interest per annum on some loans, had provided short-term loans to customers who couldn't afford them.
A statement by the Canadian parent company said the Australian operations were "insolvent or likely to become so at some future time". Chief executive Tom Denovan resigned last Thursday.
The company's website told visitors that it wouldn't be making any new loans, while administrators from Bentleys Corporate Recovery undertook a review of its operations.
But for borrowers there will be no reprieve.
While it would not issue any new loans, it said it would otherwise be business as usual and borrowers should repay their loans in accordance with their agreements.
ASIC confirmed its proceedings against The Cash Store, and the company's lender, Assistive Finance, were continuing, with a directions hearing on September 27. The administration does not include Assistive Finance.
A spokesman for Bentleys said he understood these sorts of proceedings were automatically suspended when an administrator had been appointed.