Debt purchaser Equidebt has gone into administration, Credit Today can reveal.
The firm’s debt portfolios are due to be sold to the debt purchaser Cabot Credit Management, but 60 of the firm’s 110 staff have been made redundant.
Credit Today understands the remaining 50 staff will continue at the firm while it is wound down, but ultimately they will also be made redundant.
Equidebt Holdings Ltd and Equidebt Ltd entered administration yesterday (17 June) and Tom Lukic and Simon Allport of Ernst & Young appointed as joint administrators.
In a statement, Ernst & Young said the joint administrators are also working with Equidebt Ltd’s debt collection clients to ensure an orderly transfer of their accounts and wind down of the remaining business.
Lukic said: “We are currently working with the relevant parties to ensure an orderly transfer of the debt purchase portfolio and wind down of the remaining business. We would like to thank the company staff for their support and co-operation during this difficult period.”
“Individuals making payment in respect of debts being collected by Equidebt Limited should continue to do so in the ordinary course and in accordance with any existing agreements in place. Those impacted by the above will be contacted directly in due course.”
Today’s announcement follows a revelation in the latest set of financial results for Equidebt that the firm’s directors had intended to liquidate the group following the settlement of its remaining net assets as of April 2012.
The results revealed a £19.1m impairment on the net purchased debt held by the firm as of April 2012.
This impairment charge was up from £1.1m the previous year.
As a result, the directors had decided to liquidate the business and did not prepare the latest financials on a going concern basis.
These results marked a sharp decline in the fortunes of Equidebt, which had managed to turn around dramatic losses as recently as 2011 following a financial restructuring.
At that time, the firm posted a £752,000 profit for the year ending April 2011, marking a dramatic improvement on the £3.4m loss the business posted in 2010.
This turnaround followed management changes and a £37.7m debt for equity swap with the company’s private equity backers, RJD Partners and Patron Capital.
The accounts statement also revealed a £710,000 charge for redundancy costs, but it is not clear if that covers the latest spate of job losses following the administration.
By Alex Cardno