Less than £1m of the £10.8m owed by customers to a failed payday lender is expected to be recovered, according to the firm’s administrators.

Web Loans Processing appointed Freddy Khalastchi and Martin Atkins of Harris Lipman as its administrators in November 2013. The company had been experiencing financial difficulties since September 2013 when some of its creditors called in their loans. Nevertheless, it still took out two bridging loans of £250,000 each in October 2013.

The company used the trading names Toothfairy Finance, Cashkingdom.co.uk, Easyfinanceclub.co.uk and Wegivecredit.co.uk. Web Loans Processing also took over the outstanding debts of payday lender MCO Capital when it was stripped of its consumer credit licence in March 2013.

Loads of Dosh Limited has subsequently purchased the assets of Web Loans Processing for £30,000.

The loan book of Web Loans Processing is valued at an estimated £822,500, which is little more than 7% of the total amount owed.

The administrators have also suggested that consumer credit regulator the Office of Fair Trading (OFT) had expressed concerns about whether Web Loans Processing and its associated companies Northern Debt Recoveries Limited and Marshall Hoares Bailiffs Limited were fit to hold a Consumer Credit Licence. The OFT found that Web Loans Processing staff were obstructing access to the company’s records, and it was also concerned about the use of an Israeli-based subsidiary, Transco, to collect debts, as this subsidiary was not licensed in the UK.

Back in September 2011, the Daily Mirror alleged that Toothfairy Finance was engaging in a series of disreputable practices, which included: imposing disproportionate charges when recovering debts, pressuring customers to repay when they had indicated they were in financial difficulty, making unwarranted claims about legal action that might be taken, making threatening phone calls, pursuing customers for repayment after they had taken out Debt Relief Orders and taking more from customers’ accounts than they had been authorised to.

A direct of both Web Loans Processing and Northern Debt Recoveries, responded to the newspaper article by referring to the company’s “100,000s of happy customers”. He went on to say that “collectors undergo extensive and ongoing training”, and that his company had the lowest amount of bad debt in the industry.

As of January 9 2014, the Toothfairy Finance website was still operational at www.toothfairyfinance.co.uk, suggesting it may be able to provide loans to anyone aged over 18 and resident in the UK.