Asset Acceptance Capital Corp., a Warren, Mich., buyer of charged-off consumer debt, swung to a large fourth-quarter loss, mainly the result of a noncash impairment charge.
The impairment charge on purchased debt was $32.4 million. The net loss for the quarter was $20.2 million, compared with earnings of $3.8 million, a year earlier, the company said.
Asset Acceptance disclosed the results after the market closed Wednesday.
Rion Needs, its chief executive officer, said the company "observed a significant difference between actual and projected cash collections in some … older portfolios, which caused us to perform a more in-depth review of our expectation of future cash collections," resulting in the impairment charge.
"We are hopeful that this action will aid in minimizing noncash impairments going forward."
Debt prices remained attractive as the supply of chargeoffs from issuers expanded and overall demand remained soft, Needs said.
The company paid $43 million for charged-off consumer debt totaling $1.4 billion, or 3.08% of face value, in the fourth quarter.
A year earlier, Asset Acceptance invested $31.9 million to buy portfolios with a face value of $630 million, or 5.06% of face value.
