Insolvency Advice - A Bitter Pill to Swallow
Debt Advisor Group, which helps people in financial difficulty, is seeking its own insolvency advice by drafting in a specialist to review the business after talks with a potential buyer failed.
The AIM-listed business today suspended its shares which have fallen 81.5 per cent in just 12 months, from a high of 46p in June 2006 to 8.5p.
Debt Advisor Group, which helps put together Individual Voluntary Arrangements (IVA) allowing cash-strapped people to pay back a percentage of their debt, said today that discussions with a "potential acquirer" had been terminated.
It added that it had now engaged an insolvency practitioner "to establish the financial position of the company and to examine its options".
In December last year, the company changed its name from Compass Finance to Debt Advisor Group to reflect its shift in focus from providing loans to individuals to arranging IVAs after full-year losses at the group rose from £552,000 to £6.6 million.
In 2006, the company acquired Budsworth, an IVA provider, to help make the shift in strategy.
However, the market has come under pressure in recent months as banks have tightened up the criteria by which they allow people to go into administration, and fees earned by companies such as Debt Advisor Group have fallen.
Also, IVAs are becoming harder to arrange as creditors now expect individuals to pay back a higher percentage than the average 28 per cent of consolidated debt that is usually negotiated as part of the IVA.
Source: myvesta.org.uk
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