Debt buyer Collection House has missed the September 30 deadline for refinancing its debt, announcing yesterday that its lenders, Commonwealth Bank and Westpac, have agreed to extend the standstill period until October 30.

Collection House has been in a standstill agreement with the banks since April. In a statement to the ASX yesterday it said it is in “advanced discussions with a small number of potential investors to refinance the company’s existing senior debt facility”.

“The company remains confident that an effective refinancing outcome will be achieved,” it said.

The company is yet to release audited accounts for its 2019/20 year and its shares are suspended.

Last year the company changed its operating model in response to criticism of the debt collection practices of its subsidiary, Lion Finance. Lion was revealed in a report as the debt collection agency with the highest number of court applications to put debtors into bankruptcy.

In the post-Hayne environment companies like Lion that took a punitive approach to dealing with debtors were on the nose and lenders were reported to be refusing to sell their bad debts to the company.

Changes to collection practices affected the accounting value of its purchased debt ledger assets by deferring or reducing collection cash flows. This, in turn, had an adverse impact on the company’s ability to meet the terms and conditions of its lending arrangements.

The company reported a loss of A$44.3 million for the year to June, compared with a profit of $30.7 million in 2018/19, after writing off $89.9 million of the value of its purchased debt ledger assets.