US-based Elevate Credit, a provider of online credit solutions to non-prime consumers, announced Monday that its wholly-owned UK unit, Elevate Credit International Limited (ECIL), is set to withdraw from the UK market effective June 29, 2020.
According to the company, the lack of regulatory clarity in the UK has hurt the day-to-day operations of its subsidiary, which offers consumer loans in the UK under the brand ‘Sunny.’ Moreover, the firm also identified the COVID-19 pandemic as another factor that further complicated the operations of the brand in the UK market.
“Regulators in the UK were unable to provide clarity that would allow Sunny to continue and sadly, the consumers’ choice for the most safe and reliable short-term credit option in the UK has ceased operations,” said Elevate President and CEO Jason Harvison. “I would like to give my sincere thanks to all of our UK employees and the thousands of Sunny customers who trusted us over the years.”
To date, under the command of the ECIL Board of Directors, the UK subsidiary has been placed in administration under the UK Insolvency Act 1986. The board also appointed insolvency practitioners from KPMG LLP to take responsibility for the UK business.
“Accordingly, Elevate will deconsolidate ECIL as of June 29, 2020 and will present ECIL as discontinued operations starting in the second quarter of 2020,” the company explained.
“Upon deconsolidation of ECIL, Elevate will recognize an estimated net impairment loss on its investment in ECIL of approximately $10 million (which includes an estimated US federal tax benefit of $20 million). Please reference Elevate’s Form 8-K filing today, which contains additional pro forma financial information,” it added.
As noted by Elevate in the release, ECIL is expected to complete the repayment of its outstanding debt obligation, which scores approximately £10.2 million as of June 29, 2020, by the end of this year.