Marriage Over, Debt Resolve and Creditors Interchange Hurl Blame

The planned acquisition of Creditors Interchange by Debt Resolve (AMEX: DRV) was called off today by the two companies in a series of dueling press releases that indicated possible legal action between the parties.

Debt Resolve reported in its release that it ended the deal due to “Creditors Interchange’s breach of representations and warranties under the purchase agreement related to its financial condition” in addition to a “material adverse change in the financial condition” of the Creditors Interchange.

Creditors Interchange confirmed in its release the end of the deal and said it would take steps to respond to the “false and misleading” statements in Debt Resolve’s press release regarding the failure of the acquisition. Creditors Interchange also charged that Debt Resolve violated certain conditions of the purchase agreement.

The deal had hit several road blocks since it was first announced on April 30 by Debt Resolve, a White Plains, N.Y.-based provider of a patented online bidding system. The original plan called for Debt Resolve to pay $64 million for Creditors Interchange, a Buffalo, N.Y.-based operator of 10 call centers and two offices in the U.S. and Canada.

The deal would have given Debt Resolve the breadth to offer to clients both its patented auction-style online system along with the traditional call center method of collecting debt.

The deal was originally scheduled to close on June 30 but that was extended in July to August 31. Early this month, Debt Resolve reported an extension of the deal to Sept. 14 and reduced the purchase price by $10 million. It also reported the new agreement eliminates Debt Resolve’s obligation to pay a break up fee if it couldn’t obtain financing, according to filings with the U.S. Securities and Exchange Commission.

Executives from the two firms didn’t return calls for comment.