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Debtmatters shares nosedive in IVA fears

Shares in Debtmatters today dropped by nearly 70 per cent, wiping £12.5 million off its market value, after the personal insolvency specialist admitted it was conducting a strategic review that could lead to a sale of the business.

The company, which advises indebted people who file for Individual Voluntary Arrangements (IVAs), today blamed pressure on sign-up and consultancy fees, creditors' "hardening attitudes" and general competition in the industry for the review.

Debtmatters has also suspended all TV and radio advertising, used to generate IVA leads, after it said the process of finding new business had become more expensive as competition grew.

Following today's announcement, Debtmatters' shares plunged by 68.1 per cent, or 46p, to 21.5p, reducing the company's market value from £18.3 million at last Friday's close of business to £5.8 million.

Debtmatters' shares are now trading at a staggering 94.4 per cent discount to its 385p peak in August last year.

The group has a £10 million overdraft facility although a spokesman declined to reveal how much had been drawn down. In July, it raised £3 million through a share placing to both finance its new debt management business, adding to its established loan brokerage business, as well as provide working capital.

Around the same time, the Insolvency Exchange, which represents UK banks and decides whether or not to grant IVAs on their behalf, announced that the rate of fees paid to insolvency practitioners, employed by the likes of Debtmatters, would be cut by 20 per cent.

Debtmatters said today: "Although we are encouraged by the performance of Loanmakers and the early performance of the debt management division, the IVA sector remains difficult.

"The ultimate outcome for the year remains dependent on the ongoing developments within the IVA sector which at the time remain uncertain."

It has not been determined if the company will be sold off entirely or whether it will sell separate divisions. It has a 9,000-strong IVA portfolio worth around £20 million.

Source: times.co.uk

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Wow - this is very worrying. Debt Matters is a big company. What will happen to their customers??

Good question,Will all current ivas with the company,(as i have one)be sold on to another insolvency firm with no change to your iva or if they dont find a buyer what happens then ??

In the unforseen circumstances that this firm ceases trading without finding a buyer, the regulatory bodies will take over the cases until they place them with alternative practitioners approved by themselves and with systems to cope with the influx.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

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Melanie -

If this were to happen would it have any effect on the individual debtor and their case? Could a new company demand changes or charge additional fees to continue with the IVA?

I am not with Debt Matters but was shocked to read this news.

No - they inherit the contract and cannot change any of the terms, although of course they may have their own style of dealing with things - eg annual reviews and reporting.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

Thanks to Melanie for the answers and thanks to OPTIMIST 12 for the question I was going to ask next !!

Hi,

i am a new member as i wanted to say a few things regarding debtmatters,

it's no supprise to me if this company went bust,

i am a previors employer of this company, and i was with them somtime until as of late.

i have worked with some of the best insolvency firms out their in the market, Unfortuntly with shobby dealings in the company to make money is by far from a joke.

if anyone knwos abit about this company you will see its been in the market for some years as a small iva provider which grew from know where in the past 18 months.

i have seen from first hand how this were done, cheating and lieing on their proposals, making up cases with false information, incorrect expenitures with no prrof what so ever.

debtmattera were cutting strings left right and centre until the banks kicked back and wanted evidence, which had a major impact on the business earlier this year.

and as of late this year with the banks hitting bank at IVA firms its a double crunch for this company.

sorry, but there standards are well below trading standards in my eyes,

they might of changed a few errors in the past few months in regards to this i think its been all to late.

shame about the customers if this has some sort of affect on them,

kindest regards

Darren.