Fledgling online financial services company, Net Windfall, has come to the rescue of ailing Midlands-based intermediary Motor & Home, striking a deal to keep the company solvent.
The takeover saw Net Windfall make an undisclosed offer to M & H's major creditors, Lloyd's guaranteeing brokers Holman and HSBC.
It is believed M & H owed the two firms, Holman and HSBC, a total of nearly £1m in unpaid premiums. Net Windfall's offer, however, is believed to be significantly lower than £1m.
Net Windfall's director of insurance services, Jayson Hollier, said: "We saw the opportunity to go in and acquire a lot of new customers and have done so. M & H has built up a good infrastructure over the years and we will exploit that."
The move will provide Net Windfall with 12,000 new customers and £7m extra annual turnover. Next month, the company hopes to raise £5m capital on the AIM stockmarket.
M & H operates from four offices in the West Midlands and has a workforce of 33.
But Hollier claims there will be no redundancies at M & H, instead the company will seek to recruit more staff and grow the account.
The news of the takeover provoked questions as to how M & H managed to build up £1m worth of debts.
Hollier admitted: "The level of debt amazed me. The money in client accounts does not belong to the brokers, it is the customers' money and the insurers' money. But their funds have diminished over a period of time, so [M & H] have obviously been spending it."
Net Windfall was set up last year by stock broker Leo Knifton.
Knifton is joined by fellow board members including CIA chairman Jayson Hollier, ex-Axa man Simon Tennyson, former Morgan Stanley board member Nigel Weller; Allied Dunbar board member Andy Booth; and Nigel Turnbull, author of the Turnbull Report.
Net Windfall is also in the throes of acquiring Freenet, an internet service provider with 100,000 customers, again for an undisclosed sum.