IVA firm halts trading on AIM

“Tragedy” was the word used by both the ex-chief executive of the Debt Advisor Group and former employee Ruth Badger as the firm suspended trading of its shares on the Alternative Investment Market last week.

This followed the end of talks with a potential buyer, rumoured to be a rival individual voluntary arrangement company. A statement from the firm re-vealed it had engaged an insolvency practitioner to examine its options.

Chris Smith, founder and former chief executive officer of Compass Fi-nance, which rebranded in February 2007 as Debt Advisor Group, says it has been affected by the growing number of lenders restricting IVAs.

He also blames CEO Mike Sutcliffe for diversifying the firm into debt management and away from its origins as a secured loan and mortgage brokerage.

Smith made 7m when he sold the firm to a private equity group in 2004. At the time it had a turnover of 13m a year with profits of 2.5m.

But after a dip in the company’s share price, the board replaced Smith with Sutcliffe in the spring of 2005. Smith finally left the firm in early 2006.

He says: “Compass Finance was seen as one of the best remortgage and loan brokers in the industry. It’s a tragedy. Sutcliffe came from a lending background with no knowledge of the broking industry.”

The Apprentice’s Ruth Badger work-ed at Compass until she left to compete on the BBC reality show last year.

She says: “The only word I can think of is tragedy. I’m saddened for the people there.”

But Debt Advisor Group says that while it’s been “interesting times” in the IVA market, it’s still business as usual and rebuffs Smith’s accusations.

Mark Cawood, group marketing dir-ector at Debt Advisor Group, says: “We have two clear business divisions – a mortgage and a secured loans brokerage, which we’ve added to rather than moved away from to provide debt advisory services.”