Shares in Debtmatters today dropped by nearly 70 per cent, wiping £12.5 million off its market value, after the personal insolvency specialist admitted it was conducting a strategic review that could lead to a sale of the business.

The company, which advises indebted people who file for Individual Voluntary Arrangements (IVAs), today blamed pressure on sign-up and consultancy fees, creditors' "hardening attitudes" and general competition in the industry for the review.

Debtmatters has also suspended all TV and radio advertising, used to generate IVA leads, after it said the process of finding new business had become more expensive as competition grew.

Following today's announcement, Debtmatters' shares plunged by 68.1 per cent, or 46p, to 21.5p, reducing the company's market value from £18.3 million at last Friday's close of business to £5.8 million.

Debtmatters' shares are now trading at a staggering 94.4 per cent discount to its 385p peak in August last year.

The group has a £10 million overdraft facility although a spokesman declined to reveal how much had been drawn down. In July, it raised £3 million through a share placing to both finance its new debt management business, adding to its established loan brokerage business, as well as provide working capital.

Around the same time, the Insolvency Exchange, which represents UK banks and decides whether or not to grant IVAs on their behalf, announced that the rate of fees paid to insolvency practitioners, employed by the likes of Debtmatters, would be cut by 20 per cent.

Debtmatters said today: "Although we are encouraged by the performance of Loanmakers and the early performance of the debt management division, the IVA sector remains difficult.

"The ultimate outcome for the year remains dependent on the ongoing developments within the IVA sector which at the time remain uncertain."

It has not been determined if the company will be sold off entirely or whether it will sell separate divisions. It has a 9,000-strong IVA portfolio worth around £20 million.

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