Receivers move in at Cornerstone chain

Economy: Pressure mounts for further reduction in borrowing costs as housing slump claims another corporate victim
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The Independent Online

Financial Correspondent

The remaining 70 branches of what was once the UK's largest privately owned estate agency, Cornerstone, were put into receivership yesterday with the loss of 250 jobs. The failure emphasises the continuing severity of the housing slump.

Cornerstone has already sold off its other 280-odd branches over the last year or so, mainly to small independent agencies. Over 200 of those sold still have the Cornerstone name but are unaffected by the receivership and will continue to trade normally.

Cornerstone was the subject of a pounds 7.3m management buyout from Abbey National two years ago by Tony Snarey and Bill McClintock. At that time Cornerstone had 347 offices and 1,800 staff. Abbey lost a total of over pounds 240m on the chain between its launch in 1987 and Abbey's withdrawal from the estate agency market in August 1993.

The latest receivership confirms a trend in which small estate agents have been able to buy back the same offices they sold to large institutions in the 1980s for inflated prices. Many of the large chains created in the boom, such as the 800-strong Prudential Property Services, have since disintegrated, being sold back to small firms.

Mr Snarey was understood to be angry about yesterday's receivership, and was particularily criticial of government policy towards the housing sector.

Those offices now in receivership are mainly in the West Country and on the south coast. Cornerstone was largely supported by the giant Swiss insurer Winterthur Life, formerly Provident Life, which funded the buyout.

The branches will close, although receivers Ernst & Young assured customers that current transactions will continue. Around 40 staff are being kept on in a number of offices to complete the existing workload.

The receivers have said they have already received 100 approaches from potential buyers.

The joint receiver Alan Lovett said: "One of our first concerns is to promote a point of contact for the Cornerstone customers affected by the receivership.

"A number of offices in the West Country and on the south coast will remain open to ensure that all current housing transactions and related issues are dealt with efficiently."

Mr Lovett said a communications programme would be put in place to contact customers directly affected.

The receivers said it was "early days" to speculate about whether all the workers would be made redundant; they would be assessing the viability of the 70 branches in the hope of saving as many jobs as possible.

Cornerstone made losses of roughly pounds 20m a year between 1989 and its sale in 1993. Since then housing transactions have fallen by a quarter.

Before moving to Cornerstone Mr Snarey helped Royal Insurance to build up an 800-strong chain in the 1980s, the biggest group in the country. He made a killing by selling his own small chain of offices to Royal, and eventually reinvested the money in the Cornerstone buyout. But by then the housing slump had taken hold and has stubbornly refused to improve.

A customer helpline has been set up: telephone 01734-522432.