Brisbane debt chaser Collection House calls in voluntary administrators

An embattled Brisbane-based debt chaser, once valued at $500m, has finally succumbed to years of substantial losses, falling earnings and other corporate headwinds.

The wider Collection House group has more than 1 million customers.

Collection House was once one Australia’s most prominent debt chasing businesses, valued at more than $500m.

But the embattled Brisbane-based company has finally succumbed to years of substantial losses, falling earnings and other corporate headwinds.

The ASX-listed group tumbled into voluntary administration Thursday after it was unable to restructure its substantial debt and source additional funding.

John Park, Ben Campbell and Kelly Trenfield from FTI Consulting have been appointed administrators and they held out hope that the business could be salvaged.

“Our intention is to undertake an urgent process seeking options to restructure and recapitalize the Collection House business,’’ Mr Park said in a statement released to the ASX.

FTI Consulting administrator John Park. Picture: Cameron Laird

The trio intend to carry out an independent assessment of the group, including a consideration of funding options.

At the same time, they plan to “run an expedited sale and recapitalization process in parallel’’.

Notably, their appointment covers only Collection House Limited and not the group’s other 16 subsidiaries spread across Australia, New Zealand and the Philippines.

The group has more than a million customers and employs in excess of 700 staff.

Listed in 2000, Collection House enjoyed a number of bumper years but a series of compounding problems piled up more recently, particularly since the onset of Covid in early 2020.

It suffered a net loss of just over $145m in the 2020 financial year and $32m of red ink the following year.

Problems continued in the December half, when losses totalled $63.7m as revenue plunged 42 per cent to just $26.4m.

Those huge losses prompted auditors to warn about a “material uncertainty’’ hanging over the company’s ability to remain afloat.

In an effort to turn around its fortunes, Collection House scrambled to offload its assets, including a $50m debt ledger book to Credit Corp Group earlier this year.

Collection House also took a hit from its debt facility with now-defunct Volt Bank, with an $8.5m investment made in early 2019 plunging by nearly 60 per cent by the middle of last year.

Compounding these difficulties were multiple ill-fated attempts to recapitalize the business.

Trading in Collection House shares on the ASX will remain suspended during the administration period.

Shares in the business last traded at $0.068.

That’s a 47.7 per cent fall for the year and 94.2 per cent from five years ago, with the company now having a market cap of less than $10m.

The Australian subsidiaries not impacted by the administration include ThinkMe Finance, Safe Horizons, Lion Finance and Midstate CreditCollect.