Debt Resolve Announces Further Delay in Share Sale Funding; Seeking Alternatives

Online debt collection system provider Debt Resolve said Tuesday that an investment company that agreed to buy $7 million of Debt Resolve’s outstanding shares has yet to secure the funding necessary to complete the deal despite numerous alterations to the deadline. The announcement sent Debt Resolve's stock down 8.25 percent in midmorning trading today to $1.00.

On March 31, Harmonie International LLC signed an agreement with Debt Resolve, Inc. (AMEX: DRV) to purchase $7 million worth of Debt Resolve’s stock. In its first quarter earnings release, Debt Resolve said that Harmonie would need more time to fund the transaction. The deadline to fund the deal was extended to May 30 at that time. In early June, Debt Resolve announced that the deal deadline would again be extended to June 20.

But in that announcement (“Debt Resolve Announces Delay in $7 Million Funding, AMEX Delisting,” June 12), Debt Resolve noted that it had run afoul of AMEX rules and that it faced possible delisting action if the deal was not consummated by June 20. In the announcement Tuesday, Debt Resolve made no mention of the AMEX action.

Both Debt Resolve and Harmonie reiterated their commitment to the deal in the latest announcement. “The agreement remains in full force and effect,” Debt Resolve noted. But CEO Ken Montgomery said that Harmonie offered no real proof that it is working toward funding the deal. He hedged in a statement saying, “We hope they will fund in a short period of time but we must and will protect our company, which includes an action for specific performance and damages if they do not."

Debt Resolve also said that it has been negotiating with potential additional investors, and that the company will make an announcement when a deal has been completed.

Harmonie CEO William Donahue commented in the release that the economy has made funding more difficult, but it is actively seeking the money to close the stock purchase. “Even though the economic climate has greatly affected our ability to rely on the primary institutions that generate our investment revenue, we believe the alternative sources meticulously put together will allow Harmonie to continue its investment in Debt Resolve,” he said.

Debt Resolve provides lenders, collection agencies, debt buyers and collection law firms with a patent-based online bidding system for the resolution and settlement of consumer debt and a collections and skip tracing solution that is effective at every stage of collection and recovery, according to the statement.