A depressed London property market has pulled the rug from under Chesterton, the 200-year-old estate agency recently racked by management turmoil.
The agency, founded by the uncle of writer GK Chesterton, was put into receivership this week after making 'significant losses' in the past few years, said Grant Thornton, the administrators.
It said Chesterton´s cash crunch was chiefly due to problems in the commercial property business, which lost Â£2m in the past seven months. Residential sales had held up in London, in spite of the soft housing market.
However, Ed Mead, partner at Douglas & Gordon, a competitor, said most London agents had been operating at about 30-40 per cent of capacity in recent months. The London market, which according to government figures has fallen since July, could have been the 'final nail in the coffin for Chesterton,' he said.
Chesterton, which was taken private last year after 10 years as a public company, is majority owned by Resurge, the corporate recovery business belonging to Jonathan Rowland, 29, son of David Rowland, the property baron. Its Aim-listed shares were suspended yesterday pending clarification of the company´s financial position.
Mr Rowland´s acquisition was partly funded by proceeds from Jellyworks, the internet incubator which he sold for Â£50m, making him one of Britain´s few internet entrepreneurs to make money out of the dotcom boom.
There have been so many twists and turns in Chesterton´s sale that industry insiders say the process helped precipitate its downfall. During 18 months of upheaval in 2002-2003, Chesterton lost three chief executives before it was sold in 2003 to Mohammed Jafari-Fini, an Iranian investor.
Mr Jafari-Fini later lost control of the company to Resurge after it claimed his company was in technical breach on a loan. According to press reports, he lost a high court bid last October to regain control from Resurge, which owns 86.9 per cent.
Nigel Morrison, a Grant Thornton receiver, said there had been serious expressions of interest from potential suitors for the residential business. One London competitor, Friend & Falcke, approached the receivers yesterday to inquire about making a bid, only to find it was too late, according to Simon Albertini, its owner. 'They´d already called for best bids,' he said.
He said Chesterton´s 17 residential offices, mostly in upmarket parts of London, would have been attractive. 'They did have a wonderful reputation but one has seen that diminish since 2001.'
Mr Mead said another possible bidder may be Peter Rollings, who last month quit as managing director of Foxtons, the fast-growing London agency.
About 300 commercial property staff at Chesterton lost their jobs, Grant Thornton said. Property, Separate Section
Source: Financial Times