Credit hire company 3 Arrows has written off £7.2m worth of claims because it believes the House of Lords' ruling in Dimond v Lovell has made the debt irrecoverable.

The decision to write off the debt was taken by 3 Arrows' parent group, Avis Europe, and appears in its interim results published this week.

The 3 Arrows business contributed 5% or £16m of Avis Europe's revenues in the first six months of 2000.

However, the car hire group said these results have been affected by its decision to write off £7.2m of outstanding claims owed to 3 Arrows.

Avis Europe chairman Alun Cathcart said: “The ruling endorsed the right of consumers to a replacement car and provides a platform for further growth of the industry; however, this will be at lower prices than previously.”

He added that negotiations are continuing with insurers over its remaining credit hire agreements and Avis Europe remains positive about 3 Arrows' future.

John Ralph, 3 Arrows' managing director, said: “We had planned for all possible outcomes of Dimond v Lovell. We are now using this foresight to build on the business' strengths and to map out the way forward for 3 Arrows.”