?80m risk to Claims customers

More than 60,000 Claims Direct customers could lose personal injury payments worth up to £80 million as a result of the firm's slide into receivership.

Claims Direct faces liquidation and customers may be unable to recover the £1,300 cost of its 'no win, no fee' service, according to company sources.

This charge became notorious after wiping out clients' compensation awards, and Claims Direct has since been trying to force losing parties' insurers to cover the cost.

But the issue has become bogged down in legal bickering, 'and if we go down the plughole, there will be nobody left to champion the customers' cause', a company insider said.

Claims Direct has already paid solicitors to advise its clients on their personal injury claims. But not all the solicitors, it is feared, will represent customers on the separate legal issue of having their £1,300 payment reimbursed on top of their compensation award.

However, Ronnie Henderson, Claims Direct's chief executive, denied this yesterday. 'I want to reassure customers ... Even if Claims Direct is not around to manage the claims, the solicitors have a duty to get the best deal for the clients and recover all their costs.'

The company was placed in the hands of receivers Deloitte & Touche on Friday after running up estimated losses of £22m in the past year.

Bad publicity, declining customer numbers and the emergence of cheaper rivals have all contributed to a dramatic fall in Claims Direct's share price, which was suspended at 3.25p last week. At their peak, the shares stood at 363.5p.

The company, which is being investigated by the Department of Trade and Industry, floated two years ago, netting £50m for its founders, former taxi driver Tony Sullman and solicitor Colin Poole. Both men left Claims Direct last year.

Most of its staff will be retained for the next two weeks while a buyer is sought. But a liquidation is considered more likely, since Claims Direct is weighed down by about £25m of debt and creditors are anxious to cut their losses.

Claims Direct owes £7m to franchisees, £5m to Lloyd's underwriters and £2m to First National Bank. It is also carrying £3.5m of debts associated with the recent acquisition of Claimline, a rival 'ambulance chaser'.

It is itself owed £11m, and has just £3m in cash.