Debt Resolve Enters Revenue Generation Phase

Online collection system provider Debt Resolve Inc. (AMEX: DRV) announced today in a press release its plans for 2007 and beyond as it works to rebound from its failed purchase of collection giant Creditors Interchange. Debt Resolve noted increased usage numbers for its system and said it has reached the next phase in its development.

Debt Resolve CEO Jim Burchetta told insideARM.com that the White Plains, N.Y.-based firm has moved from the pilot phase of its program into the “revenue generation” phase of the system. “Like many Internet startups, we ‘gave our product away’ in many cases, waiving many of the fees so that we could prove the system worked,” said Burchetta. “We are now beyond that stage.”

Debt Resolve reported a loss of nearly $5.3 million for the second quarter of 2007 (“Debt Resolve Revenues Explode as Losses Mount,” 8/21). Although the loss was significantly higher than its loss in the same period of 2006, the company reported soaring revenue in the quarter, mostly from acquired collection agency First Performance Corp. The company now expects revenues to grow quickly as it moves to full-fee services. In its release today, Debt Resolve pointed out that a top-10 U.S. bank has moved from the pilot program to revenue production in multiple lines of business

The Debt Resolve system went online in February 2004. According to Monday’s release, the system has processed over 15 million accounts with a face value of over $15 billion. In the third quarter of 2007 alone, $1.3 billion in face value accounts were placed into the system. The system has handled credit card, auto finance, and healthcare accounts.

Burchetta said that Debt Resolve's client list is split "about 50-50" between creditor organizations and ARM firms, such as collection agencies and debt purchasers.

Debt Resolve also said that it is aggressively pursuing strategic acquisitions. In January, the company acquired First Performance (“Debt Resolve Acquires Collection Agency First Performance Corp,” 1/23). But it was a recently failed transaction with Creditors Interchange that appeared to prompt today's update on strategic initiatives (“Marriage Over, Debt Resolve and Creditors Interchange Hurl Blame,” 9/25). The original deal calling for Debt Resolve to pay $64 million for the Buffalo, N.Y.-based operator of 10 call centers was announced in April. That was postponed several times and the purchase price cut by $10 million. Finally, the two called it off entirely with recriminations over who was at fault for the failure.

In its release today, Debt Resolve updated its activity in foreign markets, noting that it is continuing its push into the United Kingdom and other areas of Europe. The company announced late last month its entry into the Benelux (Belgium, The Netherlands, and Luxembourg), and said today that it is discussing partnerships in France, Germany, Australia and Asia. Debt Resolve also said that its online portal site has been translated into multiple languages and can settle in any language and currency.