Amigo had attempted to argue that shareholders would be taking the pain from the settlement because they would be paying for the compensation out of company profits.
It had also said getting shareholders to take a haircut would have been impossible as it would have been too difficult to contact them all - a claim the judge dismissed as “unpersuasive.”
He also was “unable to accept” Amigo’s claims that coming up with an alternative arrangement would cost another £15 million to organise.
“The evidence adduced by the company has failed to persuade me that the most likely alternative to this scheme is the imminent collapse of Amigo into insolvency...
“The evidence adduced by the company does not satisfy me that there is no room for further proposals to be formulated to preserve value for stakeholders.”
Amigo’s creditors were polled on the scheme and a majority of the 9% of creditors who voted had agreed to it.
But the judge said they were likely to have “relatively low levels of financial literacy” and had not had access to financial advice about the deal.
He also found that Amigo gave the false impression to its unsophisticated creditors that they had no alternative beyond liquidation or the deal on offer.
The company failed to explain that there could be realistically probable alternatives, he said.
In conclusion, the judge said: “I would urge the directors to continue their efforts to promote a suitable restructuring.”
The FCA said after the judgement: “The FCA has sought to get a better, fairer deal for Amigo’s customers’ due redress. We believe a fairer compromise could have been offered but was not.
“The FCA believes that Amigo can propose a fairer scheme to customers. It should also ensure that its customers are fairly represented and advised on alternative proposals for a scheme.”
It warned other considering similar actions: “This is an important judgment and any firm considering a scheme of arrangement should take it into consideration.”
Gary Jennison, Amigo chief executive, said: “Amigo is incredibly disappointed that the scheme has not been approved despite the 84,877 customers who voted in support... representing over 95% of those who voted.
“We are currently reviewing all our options and will provide an update at the earliest opportunity.”
