The prices of the AIM listed company Debtmatters (LSE:DEBT) has fallen out of bed and the world perceives the end of the IVA market has just arrived. While I first imagine that in creditor offices around the country and the U.S., guys are cheering the news by giving high-fives and saying things like “We killed the bastards”, I wouldn’t be so sure you should.

AIM listed IVA companies have been hesitant (read that scared shitless) to come out aggressively against the recent power plays by creditors through their mouth piece TIX to control the Individual Voluntary Arrangement marketplace and the professional role of Insolvency Practitioners. The irony here is that without strong, clear and public support of the role and regard for good Insolvency Practitioners, companies like Debt Free Direct (LON:DFD) wind up putting themselves more behind the 8-ball and more likely to lose future income and the ability to deliver good services to consumers in need.

Groups like DFD have grown and become a powerhouse because of the fees that they have earned from the delivery of IVA services. And even though they now stand at the top of the IVA mountain; out of breath and proud of their accomplishment, even they will tumble down if they stand silently and allow the TIX and creditor fee cutting debacle to continue.

If it was me in Andy Redmond’s shoes at DFD and looking at supporting profitability to satisfy shareholders, I’m sure that people at DFD are discussing things like conversion cost, acquisition fees and per case profit.  While the big guys benefit from the economies of scale, even DFD and other AIM listed companies are probably going to find themselves in the Debtmatters boat if they aren’t careful. Denial is a dangerous beast to tame.

Since fees are being forced down, investors in Debt Free Direct will have to be sharply attuned to the company, and others. While DFD is ridding their tail of supervisor income from their past IVA cases, new income from new cases is going to drop and over time the tail income will get smaller and smaller as well.

What the world will need to carefully watch is to make sure that the “big boys” don’t cut secret deals behind closed doors with creditors on IVA fees that link debt collection performance to fees and that people continue to monitor that best advice is being given rather than cramming widgets into a barrel to fill it up. The only loser in that case would be the hapless consumer left with no place to turn for independent representation.

The biggest danger to consumers comes from the lack of profitability per case for large companies to earn from IVA work. With less profitability comes cost cutting, including probably staff reductions, and less quality time spent with consumers. Who knows, DFD and other may feel like they’ll need to cut back on TV adverts and that would make me sad. You see I secretly like the new DFD advert with the beautiful wide aerial vistas. Very pretty.

So while everyone is probably laughing about the demise of Debtmatters, if the Debtmatters people were smart, which I assume they are, they will shed their IVA costs and layoff staff to downsize so they can live to fight another day by living off their lucrative IVA supervisor fee tail, since their steep marketing expenses have already been prepaid on the front-end, and then reinvent themselves to provide continued assistance in the consumer debt world, but in a different way. Well done guys. You know, I might even be tempted to buy some Debtmatters stock if that's the case.