Fall-out from collapse of online agent continuing amid ‘unforeseen circumstances’

The extraordinary story of online agent House Network’s collapse is continuing.

Administration costs will exceed original estimates, the administrator’s investigations are ongoing, and there continues to be no hope of reimbursement for the 800 customers who had paid upfront. There is also mystery about a bank account which, despite requests, was not frozen.

Administrator Michelle Mills of Hudson Weir had originally said that her fee would be around £70,000.

This money has now been drawn and Mills now estimates her final fee at £125,298.50. She says that the rise is due “to circumstances that I could not have foreseen”.

However, in her latest update report, she warns that there could be a further increase, saying: “At present we are uncertain as to how much work will be required for any future investigations.”

She also says that an extension to the period of the administration is likely, and that “on present information, it is currently unlikely that the administration will conclude within the next six months”.

Online agent House Network was run by founder Mark Readings (now with Keller Williams).

Under Readings’ leadership, House Network was successful for some years before running into trouble. It was bought on March 29 this year, the same day that the administrators were appointed.

The buyer, Universal Acquisitions Limited, paid £200,000, but House Network ceased trading barely a fortnight later, on April 15.

This, says Mills, increased the number of unsecured creditors significantly “as there was no continuity for the 800 customers who had paid upfront for services and therefore became creditors”.

Following the closure by UAL, Mills received over 3,000 emails plus phone calls from customers.

She also reports that the final salary bill for 63 former employees – some of whom were made redundant and some of whom had left because they were not being paid – is not yet known.

While Mills said she had ensured that all claims were submitted to the Redundancy Payments Service, she has yet to receive the final total.

There is also a mystery as to what happened to funds after House Network’s buyer UAL ceased trading the business.

She had asked for the bank account for incoming and outgoing payments to be frozen, and funds transferred into the administration account.

Mills says in her latest report: “However, the bank account was not frozen and funds were received into the company’s bank account that belong to UAL.

“I am still in the process of reviewing the transactions. However, it is estimated that approximately £30,000 currently identified as cash at bank belongs to UAL. I have yet to establish the exact figure and return the funds.”

Mills also declines to comment in her report on the exact nature or likely outcome of ongoing investigations.

She says: “Within three months of appointment, any administrator is required to report to the Secretary of State on any matters which have come to their attention during the course of their work which may indicate that the conduct of any past or present director would make them unfit to be concerned with the management of the company.

“I have complied with these requirements.

“However, due to the confidential nature of any return or report, I am unable to make any further comments.”

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33 Comments

  1. AgencyInsider

    The purchase and subsequent cessation of trading looked mighty odd at the time. Will be interesting to see what transpires.

    Report
    1. sb007ck

      I was wondering if it was just me that thought paying £200,000 for the company and then closing immediately was odd?

      Report
      1. PaulC

        People with a lack of understanding. With a lack of plan. With a lack of infastructure.

        Report
  2. AndSotheStoryBegan

    The founders of both House Network and eMoov seem to have found a natural ‘home’ at Keller Williams UK where some of the most distasteful of estate agency practices are encouraged. Naive vendors have paid dearly for these ‘experiments’, as Russell Quirk terms it.

    Report
  3. PaulC

    Due to the service level agreement or customer promise. It was known that most customers would become creditors. As failure to hit the expensive to deliver service commitments would result in valid refunds as per contractual agreements.

    This was 100% known at the time the business was initially placed into administration.

    It was certainly raised by at least one potential buyer at the time.

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    1. PaulCisMark

      The only people who would know this would be the previous owner or the administrators. Intriguing……

      Report
    2. LS2016

      Sounds like you know alot about the inner workings of House Network? I dont suppose you know if the Pensions/HMRC Investigations Department have been in touch about the 6 months of pension contributions the previous owner knowingly took from his staff but never paid into their schemes?

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  4. Property Pundit

    Kerching for the administrators…as always. What is Ms Mills’ hourly rate?

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    1. Bless You

      Yes, she found another 30k in an account and immediately put her fee up…

      Imagine estate agents quoting a price and then doubling it..

       

      Report
  5. padymagic

    unforeseen circumstances?
    Lets think about that for a moment.

    Pay anyway system isn’t popular

    poor results leads to lower referrals

    following that un-obvious outcome

    The king rat(s) jump the ship and take the cheese with them.

    Is it just me or do we all see the same fate for purple prits ? After all the founders have already gone, the investors must be nervous with the share price hovering very close to the launch offering.

    Report
    1. Bless You

      What a day that would be.
      If it does. It will be luck on our industries part. 
      We have done nothing. 
      Rightmove and zoopla should be boycotted after allowing them on site in first place. 

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      1. PeeBee

        With respect, Bless You, a great many within the industry have done an awful lot.

        It is the “authorities” that seemingly refuse to act, despite the weight of evidence.

        Report
        1. Bless You

          Individuals like you maybe, but as an industry we are still on rightmove, so that’s a fail in my book.

          keep up the bricks bashing on twitter, though peebee 😉

          Report
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