Less than a week after they reacquired control of the troubled U.K. personal injury settlement service, Claims Direct, co-founders Tony Sullman and Colin Poole have confirmed that they are discussing a possible sale of their 55.4 percent stake to Simon Ware-Lane the owner of rival service Claimline.
The two won a bitter battle to reacquire a controlling interest in the company last week for around 14 cents a share, considerably less than the $2.40 a share price of the initial public offering last year.
Claims Direct has seen the use of its services decline precipitously following revelations that the company charged more than 20,000 customers for insurance premiums to cover the costs of handling their claims. Legislation, which went into effect in April 2000, has now made these costs recoverable as part of any settlement, but it’s not retroactive. Claims Direct apparently relied on a legal opinion that it would be. As a result many clients saw their damage recoveries significantly reduced, and the resulting bad publicity has dried up the company’s business.
Ware-Lane, who already owns 4.5 percent of Claims Direct shares, confirmed his interest in raising his take in the company, and could be considering a merger with privately held Claimline. He would keep open the possibility of maintaining the company’s publicly traded shares.
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