Quindell loses huge contract, says source

Update: Quindell have since denied these rumours.

Quindell, the controversial insurance outsourcer, has lost a major contract with a large claims management firm based in the North West of England, Interactive Investor understands.

A source claiming to be close to senior management told Interactive Investor that Quindell has lost the contract, signed on 2 May 2013, with one of the UK's largest accident management companies.

The deal was originally expected to deliver over 1,000 injury claims per month to the group on a six-month rolling contract, but our mole tells us it was nearer 1,500. If confirmed, it reinforces our fears that the negative publicity around Quindell and corporate stigma may make it more difficult to win new contracts and retain existing ones.

There's "paranoia and panic" at Quindell following a board meeting this morning, we're told. The share price is lower, too, down 15% Thursday at 61p.

But it gets worse. According to the source, Quindell will not pay anyone until next year. If true, it may give the impression that Quindell's cash position is far better than the reality. It's unclear, however, whether this means it is not paying the bills. There have already been rumours suggesting that the company may have to raise extra cash, either by selling assets - Quindell recently denied planning to offload its 25% stake in National Accident Repair- or through a fundraising.

Part of the problem is Quindell's business model, which recognises the revenue in its accounts way before it receives payment for the job. That means it might end up needing more cash to tide it over until that money comes in.

After several telephone conversations with a Quindell spokesperson, we received this emailed response: "It's no comment from Quindell."

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