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Home of Choice deal leaves bulk of £6m liabilities with administrator

LSL Property Services chief executive Simon Embley has told Money Marketing that the company has not taken on the majority of Home of Choice’s £6m worth of liabilities.

The residential property firm’s principal says HoC advisers will be paid all backdated and pipeline commission that is owed to them, following LSL’s deal to buy HoC’s assets from administration for £1.5m on Friday. Embley says the £1.5m figure includes the costs of paying all pipeline and backdated commission.

Embley says: “Even though the business technically went into administration and was pre-packed – and we have no contractual responsibility to back-commissions – we’re paying all of those back commissions to the advisers.

“We’ve bought all of their assets. The only thing we haven’t bought is the business. And with buying the business would come liabilities, and with £6m of debt, we haven’t assumed the liabilities other than the advisers.”

The last published accounts for Home of Choice for the year ended March 31, 2009 show it had over £4.6m in bank loans falling due within two and five years.

It was revealed today that Home of Choice staff and appointed representatives will initially trade under the LSL Property Services subsidiary First Complete in order to allow brokers to continue trading uninterrupted.

It is thought that the trading name Home of Choice will be resurrected at some point, possible as a trading name of First Complete, but to avoid delays in writing new business, it was thought better to trade under First Complete in the short term.

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Comments

There are 15 comments at the moment, we would love to hear your opinion too.

  1. Great, so the Directors walk away with a nice lump sum, the ARs all get paid nicely, and we, the tax payer have to pick up the bill for the loans they took from the Banks and were unable to repay!! No wonder our banking system is in the state it’s in – that’s another £4m added to the national deficit. Apalling bad business management.

  2. On reading the above I am still yet undecided whether I should sign the new contract with LSL. The above would indicate that commission clawbacks would be liable by the old HoC and not LSL thus leaving me the ability to rewrite all the business i’d written with HoC? Technically HoC were in breach of my contract with them for 1. not paying the commissions owed and 2. for going into administration.

    Can anyone shed any further light on this subject?

  3. I thought the FSA were taking firm action not to allow a prepack leaving “others” ie you & me as taxpayers to pick up the tab. Did this one slip through the net as an oversight?

  4. Some comments posted already.

    I also am interested to know how the panel Insurance company’s come out of this, have LSL taken responsibility for all potential reclaims of the Life & GI backbook?

    Who actual benefits from the £1.5 million paid for the assets?
    HofC Directors, AR’s via their so called shares or the creditors?

  5. Corrie Fautley 11th May 2010 at 8:09 am

    So, is the whole sytem now completely corrupt? Are the directors of HOC, The adminsitrator, The FSA and potentially the advisers all complicit in allowing a business to walk away from their obligations to repay debt?

    What a great example for a business purporting to give financial advice to clients on loans and mortgages! It surely has to bring into question the quality of advice being given.

  6. I smell a rat with all this HOC stuff I wonder if I was to research the HOC and LSL connection wonder what would come up? It reminds me of Derren Browns TV programme last night. A medium knowing all this poor womans details… Subsequently the medium failed to disclose his sister lived nextdoor to the poor lady…
    The plot thickens.

  7. In reply to anonymous 5.26 pm 2nd post

    On reading the above I am still yet undecided whether I should sign the new contract with LSL. The above would indicate that commission clawbacks would be liable by the old HoC and not LSL thus leaving me the ability to rewrite all the business i’d written with HoC? Technically HoC were in breach of my contract with them for 1. not paying the commissions owed and 2. for going into administration.

    Can anyone shed any further light on this subject?

    This is the sort of behaviour that gives this industry such a bad name and helps put companies into financial difficulty. You are clearly only interested in churning your business because you are no longer liable for the clawback. Unbelievable!!!!

  8. Quote:

    “thus leaving me the ability to rewrite all the business i’d written”

    Isn’t it time you left the industry??

  9. Another great example how poor businessmen (that is very loosely termed as well) in this industry simply take their pennies and ditch the crap for everyone to pick up via increased fees. Not to mention the reputational impact this has although not sure there is much further south that can go!

  10. To Anonomous 8.09am
    How is the advice of the advisers to clients linked to the directors ruining a business?

  11. Maybe the problem was that the company was making profit but not enough to repay the loans. Maybe they were unable to get their loans extended. The only thing i know is that the CEO and MD stood up and took the abuse in front of all of us. Maybe worthy of note

  12. Re: A Nony Mouse (very droll)
    I am the advisor that made the comment above that you decided to jump on the moral bandwagon! The business I refer to is business I have written but not yet paid on so therefore money that HoC has STOLLEN from me!

  13. I also passed comment on your posting. You clearly said ALL of the business. The story also states that you are to be paid what is owed to you. On that basis what else should anyone think about your intentions.

  14. With regards to churning, you might be able to get away with it from the point of view of doing it, but i would be wary how it would look to the FSA from a TCF point of view. Also even if you don’t have to pay the clawback, remember providers monitor consistancy and can pass this data onto the FSA. I’m sure they wouldn’t be impressed if the reason you gave for re-writing was “because i wasn’t liable for the clawback anymore”.

    Although i understand the difficulties you face regarding pipeline commission didn’t the articles state that you would get paid this? Its not the providers that haven’t paid, and they are the ones monitoring consistancy – i know of plenty of advisers that have been unhappily been put onto non-indemnity commission for a lot less!

  15. I would’nt trust new company if they are prepared to let guys on the board who have basicly cleaned your clocks and allowed to dump 6 million on administrators. they should be banned.

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