Helphire has conceded defeat in its battle with insurers over millions of pounds of outstanding credit hire bills.

The vehicle hire and accident management group has issued a profits warning and admitted the court system could not handle the thousands of cases for outstanding bills that insurers were refusing to pay.

A “significant” first-half loss was predicted as Helphire announced a deal that it hopes will clear the logjam of court cases.

The deal, with Direct Line, is for the settlement of all outstanding credit hire and credit accident repair claims at a discount. Helphire will benefit from swift payment of future claims.

David Lindsay, finance director for Helphire, said: “You can insist on taking the moral high ground, but eventually commercial reality prevails.

“We are getting all the bad news out of the way now to ensure the company is profitable going forward.” Helphire hopes the deal will be the catalyst for a rush of settlements with other insurance firms.

It has also agreed to charge customers according to figures provided by the Association of British Insurers.