Former staff of collapsed online agent House Network have been named as the preferential creditors – but how much they will get is open to question. It looks as though sellers who forked out money upfront will get nothing.
Meanwhile, mystery continues to surround why the firm that purchased online agent House Network out of administration ceased trading about a fortnight later.
United Acquisitions Ltd agreed to buy House Network from administrators Hudson Weir on March 29.
It paid £200,000 cash on completion and also took on repayment of the £1.5m bank charge which helped trigger the administration.
But, says Hudson Weir administrator Michelle Mills in a new report: “On 15 April 2019, I was advised that the purchaser had ceased to trade for reasons which I am unable to disclose.”
Mills’ report, on her proposals to creditors, confirms that UAL intends to refund customers who paid House Network after March 29 until cessation of trade.
Customers who paid for services before March 29 will be unsecured creditors in the administration – however, it looks as though they will get nothing.
Mills’ report says that “now that the purchaser has ceased to trade”, realising assets of House Network to make a distribution is the only reasonable objective.
At the time of valuation – the date is not given but was before Mills’ appointment on March 29 – assets included office equipment and furniture.
In addition, 19 customers were indebted to the company for the sum of £11,000, and House Network had entered into 200 no sale, no fee contracts with a potential value of £260,000.
The administrator’s report identifies the former employees who had not been paid wages or holiday pay as the preferential creditors.
The report says that at the time of Mills’ appointment, she was aware that 63 staff had either been made redundant or left the company due to non-payment of wages this year.
The report anticipates a distribution to preferential creditors, but says it is unlikely that there will be sufficient funds to enable a distribution to be made to others.
Currently Mills estimates that £27,623 will be available for preferential creditors, owed a total of £95,784 – meaning a shortfall of £68,161.
Mills says her own fees will double.
She was first consulted by House Network on February 27, when it was agreed that fees and expenses pre-appointment as administrator would be an estimated £15,000.
“However, the sale took considerably longer to negotiate than anticipated and a significant number of employee enquiries were received in the month we were instructed.
“Our time costs were therefore significantly over our estimate at £31,947.”
Her report lists 71 company creditors, with Varengold Bank owed most at £1.5m, followed by HMRC at £367,530, and Google Ireland at £246,552.
Other creditors include director and founder Mark Readings, at £152,970, and Rightmove at £41,637.
A detailed statement of affairs from House Network director Mark Readings, giving the company’s estimated financial position on March 29, was published yesterday.
Unsecured creditors seem to be owed £630,000, with net liabilities of £1.5m to preferential creditors.
It suggests that estimated total assets available for preferential creditors should realise £95,800, despite putting a book value on one asset, its software development, at just over £2m.
It also describes some of its debts in terms of ‘turnover’ – presumably what it paid over unspecified time limits: Google at £397,000, Rightmove at £274,000, and Viewber at over £35,000.
The statement of affairs also references 40 staff, likely to be the employees still in place at the end of March.
* Yesterday evening Viewber said it had held 25 sets of keys, 11 of which have already been returned. The outsourced viewings service is awaiting proof of ownership in just one case and said that everything was in hand.
Outrageous really, surely the customer comes first?
This sort of business is rotten to the core and must be regulated moving forward.
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The customer certainly should be prioritised over companies, but I would argue that the staff who are owed money should come before the customers.
After all, the decisions that were made to take it into administrations were not the ones made by the entry-level staff. The Director owned £150k+ is somewhere near the middle of the lower end of importance in my eyes.
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“On 15 April 2019, I was advised that the purchaser had ceased to trade for reasons which I am unable to disclose.” says the administrator.
Well, you seem to have disclosed just about everything else, so why the secrecy? Something smells right royally fishy about this UAL acquisition.
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Bizarre that they smashed £200k cash in and then walked.
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use the losses to offset profits?
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2 things strike me here
Firstly, although i am guessing UAL were the only bidder, what sort of due diligence was carried out by the administrator on them? Are we looking at some sort of money laundering issue here?
Secondly, yet again the much vaunted bespoke software supposedly worth millions is basically worthless. First Emoovs which Quirky stated was worth what £10 million and now this. Both are worth less than a share in Countrywide.
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UAL were not the only bidder – See previous PIE article on 29th April.
They were the highest bidder at £200k.
Two other bidders offered £50k – perhaps competitors or ex competitors of HN 🙂 – what’s the story PIE?
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Fair enough, but yes definitely other questions to answer. As when you have more than one offer on a house, the highest offer is not always the best.
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They all said they were “cash buyers” 😉
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Due diligence isn’t the concern of the administrator. Getting the best monetary result for creditors is, which means in these circumstances, pound notes rule the roost over everything else.
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In a situation like this could the client not make a claim on the PI insurance?
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No, PI would be an employee absconding with Client Money.
CMP insurance covers Client Money where firms go bust. In this instance though, it’s just a marketing fee. That money is long gone on the Principals’ holidays.
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Technically those who paid upfront aren’t creditors and wouldn’t be entitled to any money back. Those customers knew what they were paying for.
Employees, on the other hand, are indeed creditors if they are owed wages that have not been paid.
The ruling might not be seen as being fair, but it’s certainly correct.
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“Technically those who paid upfront aren’t creditors and wouldn’t be entitled to any money back. Those customers knew what they were paying for.”
According to the HouseNetwork website, LordElpus56 – THIS is what they were paying for:
“Sell your home for only £795
Premium service with a money-back guarantee”
Good reason why those 000s of aggrieved homesellers feel they have a valid claim, I would suggest…
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Has anyone the capacity to offer House network customers a no sale no fee discounted High street option?
For example anyone who did pay upfront – an exclusive offer of flat £800 fee after completion to sell with you?
means the affected don’t lose out much and their house still could sell, the agent that steps in to help will hopefully get reviews and happy customers saying *** agency saved my bacon… Just a thought. It seems the right thing to do, as High street agents – to help correct this mess and show why we are worth that extra commission!!!
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christinaestateagent68
Why buy instructions at substantial cost to the business?
Why should existing and future customers subsidise HN customers?
Surely you are advocating listing guaranteed liabilities?
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A Companies House search, quickly shows NO record that United Acquisitions Ltd actually exists……
Maybe that has something to do with it????
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erm… actually…
…they do exist:
beta.companieshouse.gov.uk/company/11879126
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I stand corrected, sorry.
Hmmm? Didn’t come up in my search….
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Nothing to apologise for – Companies House searches are pot-luck at best!
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