Dozens of credit hire firms are facing a cash-flow squeeze because of the uncertainty surrounding the House of Lords decision in the Dimond v Lovell case, warns Peter Holding, legal director for Helphire.
He estimates more than 50,000 credit hire cases are currently tied up in the courts. The case has been postponed by the Law Lords until May 29.
Last week, non-fault accident specialist Alpha Accident Management was forced to suspend its shares on the stock market.
The company, which has 55 staff and a turnover last year of £5.8m, blamed the uncertainty on the result for affecting its cash flow.
Holding said the legal delay was a headache for the sector as a whole, but hit hardest on smaller credit hire companies that lacked significant resources.
He said there was a growing backlog of up to 50,000 credit hire cases tied up in the courts that could not be settled until the Dimond v Lovell judgement was delivered.
However, Holding stressed Helphire was experiencing no such cash flow difficulties
"There are a number of companies in the market currently struggling, but Helphire is relaxed about its situation. We are continuing to collect large amounts of cash and are unaffected by the House of Lords delay," he says.
He added, that insurers can expect a large windfall should the decision go their way, while some credit hire firms could find part of their book becomes potentially irrecoverable.