Today’s personal insolvency figures, released by the Insolvency Service, show that bankruptcies fell, year on year, by nearly a third (28%) whilst Individual Voluntary Arrangements remained stable, growing by 4.5% between Q4 2010 and Q4 2011.

Commenting, Andrew Smith, director of external affairs at debt resolution company, ClearDebt, said:

People are reducing debt at the moment and many are unable to enter a scheme like an IVA because they are unemployed. So, in a year where personal insolvencies have shrunk by nearly 6%, it seems suprising that IVAs have grown slightly: We believe this is because IVAs are now being arranged at much lower levels of debt than formerly. It used to be that an IVA was impossible to do for someone who owed less than £15,000. Now we understand half of the top ten IVA companies arrange IVAs for people with unsecured debts of £10,000. ClearDebt regularly puts them in place for people who owe down to £8,000.

We believe that IVAs are now eating into the market formerly taken by informal debt management plans – although there is evidence that these are growing too, and at lower debt levels.

For further comment on the insolvency statistics please contact either:

Andrew Smith – Andrew.Smith@cleardebt.co.uk, 0161 968 6825, 0791 240 7532

or

Sally Hardiman – Sally.Hardiman@cleardebt.co.uk 0161 968 6815

Debt resolution company, ClearDebt, is pleased that the OFT’s new debt management guidance, published on Tuesday June 14th June is likely to outlaw “full and final settlement” schemes such as those run by companies like DCM Apex, whose clients ClearDebt has been working with since that company went into administration on 2 March 2011.

Commenting, ClearDebt CEO, David Mond, said:

The guidance makes completely clear that it is to apply to firms offering full and final settlements and also that only in exceptional circumstances will a firm be permitted to retain clients’ funds for more than five days. Further, the guidance stipulates that a company cannot hold on to monies that should be sent to creditors unless both debtors and creditors are made fully aware of the fact and it requires client monies to be protected if the company itself goes bust.

Had these arrangements been in place before, it’s likely that many clients of companies like DCM Apex would be much better off now than they are.

The OFT guidance imposes much more detailed requirements on debt solution companies than has been the case until now. ClearDebt believes that the guidelines may force many debt management companies to throw in the towel:

The cost of compliance – both in financial terms and in more onerous business processes – will go up sharply when these guidelines are enforced.

says ClearDebt director of marketing and external affairs, Andrew Smith:

Many of our competitors, especially those that rely on cold-called leads bought from third parties, will, we believe, find it difficult to sustain their business model under these new rules.

Research by Debt Resolution company, ClearDebt shows that average debt repayment time for remaining Apex DCM Solutions clients was more than 20 years

ClearDebt investigated a sample of 1,036 DCM Money clients. Results provide a unique insight into the dubious business of DCM Money – a company run by bankrupts (for consumers in debt) that went into insolvency on 2 March 2011.

The sample showed clients of DCM Money trading as Apex owed their unsecured creditors a total of £31,897,427 yet the balances for debtors had only reduced by £972,348, amounting to a 3% reduction of its clients’ initial balances across the board.

ClearDebt’s analysis attests that 57 per cent of DCM Money’s clients’ debt had either increased, or stayed the same. 18 percent of clients’ debts had increased. The balances that had risen had gone up by, on average, 12 percent and the balances that had fallen had gone down by just over six per cent. Further indicators of how DCM Money, went into insolvency.

Research showed that the average DCM Money client would take more than 20 years to repay their debt and the company failed to distribute around £75,000 per month for clients, breaking OFT guidelines.

Andrew Smith, director of marketing and external affairs for ClearDebt, commented: “When clients first go into a fee-charging debt management plan it is likely that – for a few months – the total debts will continue to rise. However, over an entire book of debts, sometimes including plans that have been going for years, we would expect to see a significant majority of the individual debts would have decreased in value,. This has not been the case with the DCM clients whose data we have seen.”

David Mond, CEO of ClearDebt commented: “What seems quite telling is the time it looks likely it would take Apex DCM to repay their clients debts. The average Apex DCM client, assuming all interest and charges were frozen would see their debts repaid in just over 20 years. It can’t be certain what effect, if any, negotiating full and final settlements would have had on this.”

ClearDebt is advising Apex DCM clients on all their options and is providing them with the last data relating to their cases held by Apex DCM. ClearDebt is also offering previous clients of Apex DCM two different options, Individual Voluntary Arrangements (IVAs), which appear to be feasible for around a third of that group and which would enable them to become debt-free within five years and a completely free debt management plan which, on average should make clients debt-free after just over 11 years.

Andrew Smith concluded: “We know that some clients had been paying into their plan for years and others had run for only months – so it’s very difficult to make more than very general conclusions – the administrators have a duty to report on the conduct of directors in any insolvency case: We think they will find plenty to say in the case of DCM Money.”

- Ends -

Notes to editors:

Andrew Smith is available for comment and Interview:

Andrew Smith, ClearDebt Director of Communications and External Affairs, will be available to comment.

Andrew is the spokesman for Debt Resolution Forum and has spent more than 25 years in professional services marketing – half of that specialising in insolvency and debt, and played a major role in raising the profile of the insolvency profession and it’s regulatory and representative bodies. Andrew is a member of the Chartered Institute of Public Relations and also has diplomas from the Chartered Institute of Marketing and the Communications, Advertising and Marketing Foundation.

About the data:

The data sample used relates to 1,036 customers who either had a current DMP with Apex DCM or who had stopped paying into their plan sometime prior to the company going under, however around 500 clients did complete their plan with Apex DCM. Some clients had been paying into plans for several years whilst others for just a few months’ hence only general conclusions can be drawn.

Apex DCM customers should note that ClearDebt Group plc, or any of our member companies, agents or representatives have had absolutely nothing to do with the prior conduct of any plan held with Apex DCM prior to 2 March 2011 and cannot advise you on any matters that took place before this date. Nor can we advise on any matters arising from the current administration of Apex DCM, however clients should note that any payments made since 3 March 2011 should be recoverable from the joint administrators, who are currently formulating proposals which will be sent to clients in due course. The administrators will not be making any payments to the creditors of debtors in Apex DCM debt management plans.

ClearDebt Group plc (“ClearDebt” or “the Group”) Unaudited Interim Results for the six months ended 31 December 2010

ClearDebt, the AIM quoted personal debt resolution adviser is pleased to announce its Interim Results for the six months ended 31 December 2010. The period saw significant growth in EBITDA and revenues, driven by a strong growth in the provision of Individual Voluntary Arrangements (“IVAs”). The Directors expect continued growth to the year-end and for the foreseeable future on the basis of the much-publicised expected ongoing levels of personal debt in the UK. The Group is expected to benefit from this as it continues to demonstrate the strong operational success it has enjoyed since its inception.

Financial Highlights:

• Revenues increased to £3.97m (2009: £2.27m) up 75%
• EBITDA of £1,156,849 (2009: £438,097) up 164%

Operational Highlights:

• Significant increase in number of IVAs passed:

761 agreed in period, more than 100% increase (2009: 350)

• Alternative cash flow/business diversity continues to be provided by Abacus, the Group’s debt management arm which now has 6,345 debt management plans providing income.

Outlook

• Continued organic growth to drive increased profits; potential growth from acquisitions
• Number of IVAs passed continues to increase and future looks highly positive

• Pipeline of new business suggests strong continued growth through to the year-end
• Current economic environment continues to create increasing demand for personal debt resolution and will continue for the foreseeable future.
• Negotiations ongoing with new referral partners to provide an increased level of IVA referrals.
• The IVA and debt management industry provides many opportunities for a consolidator to drive growth from acquisitions

David Mond, CEO of ClearDebt commented:

ClearDebt has now successfully integrated the Relax acquisition and is ready to benefit by virtue of our strong operational performance. Whilst the combination of the nation’s addiction to personal credit and the continued tough economic outlook have created personal tragedies for many, ClearDebt continues to provide a manageable and compassionate solution to personal debt.

This situation does not look likely to change any time soon. Our continued operational strength is largely down to our unparalleled kaizen based system that has allowed us to grow from processing 10 IVAs a month 4 years ago to 150+ now. We are confident that we will be able to provide not only further organic growth, building on our genuine success, but also take on IVAs set up by other providers which are not as well organised as ClearDebt and which may be looking to exit an overcrowded market.

Please see pdf link for full Interim results:
ClearDebt Group six month Interim results December 2010

For further information, please contact:
ClearDebt Group plc
David Mond, Chief Executive Officer
Tel No: 0161 968 6805

Seymour Pierce Limited
(Broker and Nominated Adviser)
John Cowie or Guy Peters, David Banks or Katie Ratner
Tel No: 020 7107 8000

Financial Highlights:

•    A positive step change across all valuation metrics

•    Another excellent year, further improved by the acquisition of the Relax Group plc (“Relax”) back books, together with further substantial growth in the numbers of new IVA cases approved during the past year

•    Very strong and stable new cash flows from the £2.7m acquisition of assets from the administrator of Relax

•    Successful refinancing to pay all acquisition costs

Operational Highlights:

•    Continued impressive organic growth, combined with intelligent acquisition

•    Very strong increase in new Individual Voluntary Arrangements (IVAs) through the core ClearDebt business, particularly in the last quarter of our financial year

•    3,700 IVAs and Protected Trust Deeds (PTDs) added through acquisition of the Relax book

•    Total number of IVAs and PTDs generating income was 4,894 as at 30 June 2010 (2009: 858)

•    6,316 Debt Management Plans (DMPs) managed through Abacus and Relax (2009: 3,430)

Outlook:

•    Continue organic growth due to prevailing socio-economic conditions and successful operational development

•    New acquisition opportunities constantly being explored

•    Kaizen based scaleable model reduces acquisition risk

•    Integrated growth strategy to drive business forward to market leading position

David Mond, ClearDebt CEO commented,

“The IVA market has continued to grow strongly and ClearDebt has substantially increased the numbers of IVAs it has dealt with and continues to outperform the growth rate in the wider market as we continue to increase market share.

The last quarter of the financial year produced a record number of IVAs for the Group and this figure has almost been equalled in the first quarter of our new financial year after only two months of the period. Our overall conversion of leads as a Group across all solutions remains excellent and, whilst we have seen a slowing in the rate of acquisition of DMP plans, our view is that we are merely experiencing a shift to a higher proportion of clients for whom an IVA is the more appropriate solution.

Given the current economic outlook in the UK, with unemployment showing no signs of falling, together with further tax rises and public sector cuts to come in the short to medium term, I believe the Group is well placed for another highly profitable and successful year – without any further acquisitions. We remain delighted with our organic growth, but also are entirely open to the possibilities of acquisition, due to our unique Kaizen based scaleable business model.”

17 September 2010

For further information, please contact:

ClearDebt Group plc     David Mond, Chief Executive Officer
Tel No: 0161 968 6805

Seymour Pierce Limited
John Cowie/Guy Peters (Nominated adviser)
David Banks/Katie Ratner (Broker)
Tel No: 020 7107 8000