Paul Carter, chief executive officer of AIM-quoted personal debt management specialist Debts.co.uk, is expanding the company into the corporate insolvency field and looking for acquisition candidates to speed the process. The Hertfordshire-based company, which lifted pre-tax profits 62 per cent to £3.4 million in the year to last July on turnover nearly doubled to £11.6 million, sees the corporate sector as a growth area in today’s dire business climate and a logical extension of its personal insolvency work.

A corporate move would come hard on the heels of February’s £1.25 million acquisition of Glasgow-based PB Recovery, a deal that Carter points out brought with it £1.8 million of debtors and work in progress, £600,000 in fees and £2.1 million of contracted revenues. He says Debts.co.uk has cut £2 million from annual costs through rationalisation after two previous acquisitions and faces extra growth prospects with next year’s introduction of simplified voluntary arrangements, which will allow a debt resolution to be authorised by a simple majority of creditors, rather than the current requirement of 75 per cent.

Carter argues the old hostility of the banks, which used to accuse insolvency practitioners of encouraging defaults and swelling their bad debts, has gone after an industry agreement last year which established protocols and streamlined procedures – to the benefit of practitioners’ margins. Arguing that banks on average sell bad debts on for 26p in the pound while insolvency specialists deliver 52p in the pound, he says the two sides are now working together.

Debts.co.uk has grown 400 per cent since its float two years ago, boasts Carter, who says the company has no debt and enjoys a £3 million revolving credit facility. But the previous row with the banks and general sector nerves have slashed its share price in two years from 219.5p to 35p, below net asset value and valuing the company at a mere £9.45 million.

That rules out paper acquisitions, for now. But, if Carter’s game plan succeeds, Debts.co.uk could regain some lost favour.

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