Claims Direct, Britain’s personal injury settlement service, which has suffered falling profits following a series of adverse articles in the country’s newspapers, could be sold to two of its top managers.
According to a report in London’s Financial Times, Tony Sullman, Claims Direct’s non-executive chairman and Colin Poole, deputy chairman, offered 10 pence (about 14 cents) a share to acquire the company. It traded as high as 360 pence ($5.08 ) a share when it first went public last July.
Since then a series of articles have attacked the company for requiring claimants who use its services to purchase $1400 ( $1975) worth of insurance to cover the cost of failed claims. Newspaper and TV investigations attacked the company for making claimants pay the premiums on the policy, even if they won a settlement. A currently pending legal action will decide if the insurers have to pay for the policies.
Following the reports Claims Direct suffered a precipitous drop in the number of cases it handles – from around 4000 a month to less than 2500. It reported a pretax loss of £20.2 million ($28.5 million) for its fiscal year ended March 31.
Company officials have advised shareholders to take no action on the offer.
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