Chesterton: the great escape

Chesterton: the great escape
Paul Yandall11/03/2006 12:09

Where are they now? One year on from the collapse= of the 200-year-old firm, EG looks at what went wrong and catches up wi= th some of the key players and teams. On this spread, the Docklands specialist Cherryman; overpage, ex-chairman Graham Robeson and head of resi David Taylor. By Paul Yandall

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Chesterton International: a decade ago it was the top firm of surveyors. Last March, it closed its doors for the last time - leaving a tarnished legacy

Shortly after 8am on Tuesda= y 8 March 2005, as many in the industry were heading down to MIPIM, Brian Thompson took the type of call employees dread. Chesterton chief executive Ted Webster was on the other end of the line to tell him the company had collap= sed.

"Why the hell has this happened?" was Thompson's immediate reaction.

One year on, and sitting in his office at Drivers Jonas's HQ in London's Mayfair, Thompson describes the minutes that followed that call as "a bit of an experience".

He needn't have worried.

"Within hours, the phone started ringing with offers to take not ju= st me but my whole consulting team, and Drivers Jonas was one of the first to call," says Thompson.

In the end, most of the 700 employees caught up in the collapse are stil= l in the property business. A great many, like Thompson, have moved on, either joining other firms or striking out on their own. Aro= und 200 staff remain, to run Chesterton's residential business. But legal squabbles, concerns over professional indemnity insurance and the £9m hole in the staff pension fund continue to plague the Chesterton legacy.

Although the residential business survived the collapse intact and is now owned mainly by Middle Eastern consortium CIC, the commercial arm is all but dead, leaving a number of people to "squabble over the carcass", = as one ex-employee recently put it.

One of those people, former owner and chairman, Mohammad Jafari-Fini, is still engaged in legal action against those who backed his takeover bid in = 2003 but eventually ousted him from the company.

His attempts to regain control of Phoenix Acquisitions, the takeover veh= icle he used to buy Chesterton, came unstuck in January, when a high court judge found Jafari-Fini had paid a £150,000 bribe, which amounted to a defa= ult of the terms of a £12.9m loan.

Aiming to clear his name

Jafari-Fini, who has returned to property consultancy work, has appealed against the decision. "It hurts me when people say I'm squabbling over= a carcass," he says. "This is about clearing my name. How can I look my friends and my family in the e= ye until I clear my name?" he says.

For their part, his former backers - including Jonathan Rowland, son of Jersey-based financier David Rowland - are engaged in court action against Jafari-Fini for court costs and damages.

In other legal actions, former Chesterton chief executive Neil List and chief operating office Mike Backs won more than £5m compensation betw= een them last July for unfair dismissal. They were sacked for disobeying chairman Peter Brooks by informing shareholders = that the company had received an alternative offer for Chesterton following Jafa= ri-Fini's 12p-a-share bid.

But receiver Nigel Morrison from Grant Thornton says the ruling is a hollow victory: "Given the level of bank debt and preferential claims I doubt there'll be much, if anything, left for unsecur= ed claims, such as theirs."

From its height in 1997, when it topped the EG agents' league tab= le with turnover of £65.4m, the company fell into a black hole of debt, totalling £22m. This tim= e last year, it was saddled with a £7m debt to Royal Bank of Scotland, anoth= er £6m to the Rowlands and a £9m pension deficit.

Creditors out of luck

How much of that will be recovered in the end is still uncertain, as the= re remains only an insignificant, residual amount of assets and cash left, says Morrison.

If creditors have so far been out of luck trying to squeeze cash out of = the defunct company, then so too could many of Chesterton's former staff. The pension fund, which should have been worth around £33m, is being wound up and there are fears the £9m hole will not be filled. Help from the government's pension protection fund is b= eing sought, but there is no guarantee of any relief.

The issue of PII cover for negligence cases that could involve former Chesterton staff in the period w= hen the firm cut its PII premium payments also lingers. As many as 50 former employees could be fined up to £5,000 each and expelled from the RICS= for operating without adequate insurance. Because the company went bust, work undertaken there is not automatically covered. Some ex-staff obliged to have "run-off" cover, the liability insurance required after a surveyor retires or the firm stops trading, could now be uninsured.

The former head of professi= onal services at Chesterton, Ben Moon, says mooted changes to RICS rules governi= ng indemnity insurance could put former staff in the clear. "We believe t= here will eventually be an accommodation with the RICS over the insurance issue," he says. "Th= e real concern is the uncertainty for a lot of former Chesterton employees."<= /p>

Despite the recovery most former staff have made, the unresolved insuran= ce issue, the hole in the pension fund and the seemingly never-ending legal squabbles ensure that one year on, Chesterton's legacy remains as tarnished= as ever.

Cherryman: the specialist Docklands start-up that is n= ow spreading its wings


The Cherryman = team: (l-r) Colin Leslie, Bob Ashton and Rupert Cherryman

There is a cheeky reminde= r of the past at Rupert Cherryman's new Docklands office.

In a quiet room in Beaufort House in South Quay, E14, an Evening Standard poster is pinned prominently to the wall. It was on display outside Chesterton's Docklands office on 8 March 2005 and was the first t= hing Cherryman read when he left the firm in the 15 minutes notice he was gran= ted by receivers Grant Thornton.= The poster reads: "Top Estate Agent Goes Bust".

A year on, and Cherryman's eponymous start-up firm is alive and well a= nd has just celebrated its first anniversary with a "bobsleigh challenge" at La Plagne in the French Alps.

While the souvenir has been posted up as a joke, Cherryman's other memories of the firm are not so amusing. Chesterton not only owed him his annual bonus in a bumper year, it had not refunded him for £3,000-w= orth of expenses, including the cash he laid out for his team's Christmas part= y.

Cherryman is clearly hurt by the way his former firm collapsed. He had, after all, worked there for 16 years. But he says he is not bitter about = it. "There's no individual = you can blame," he says. "And my view is now: 'thank God it happene= d', because Chesterton was dying a death and I couldn't see it.

"All of the quality people that remained to the end thought that things could only get better…" he says wryly.

"So there is something about being out on a limb - however shocki= ng and horrific it was at the time - because otherwise we'd still be there n= ow living on false hopes."

So, on the advice of his Chesterton clients, Cherryman decided to go i= nto business for himself, and set up his new firm with Bob Ashton, who was al= so formerly at Chesterton. He was joined by new recruit Colin Leslie, a rece= nt graduate, at the end of April.

It's been an emotional year for Cherryman, but he has managed to hang = onto clients, including Hammerson, Ballymore and GE. He has also won a signifi= cant letting instruction from the Daily Telegraph to be joint agent for the subletting of the newspaper's 135,000 sq ft of space at One Canada Square in Canary Wharf. And his firm can now boast the fourth largest market share (11%) in the Docklands, according to the Lond= on Office Database's 2005 league table. And that covers only nine months of trading.

But Cherryman does not want his firm to be chained to one locality, as= he was at Chesterton. "On the agency side, it's business as usual," says Ashton. "But we are no longer restricted by geography in terms = of development and investment.

"Now, we are three ambitious people who are free to roam. And we'= re being offered sites in Madagascar, Borneo, Croatia, everywhere. We feel liberated."

Jafari-Fini: former chairman vows to clear his name

After winning his audacious bid for Chesterton in 2003, Mohammad Jafari-Fini must be wondering how it could all have gone so wrong. The former chairman and owner not only lost = the firm, he also lost his latest court attempt to reclaim what was left of t= he business.

Instead of receiving recompense for being ousted as chairman and having his shares taken by his backers, he suffered the ignominy of being found = to have paid a £150,000 bribe to secure the takeover. He has appealed against the High Court decision which found the bribe amounted to a "major default" of the £12.9m loan facility from Jonathan Rowland's company Resurge. But Jafari-Fini remains upbeat. "I will n= ot rest until justice is done."

Jafari-Fini, who made his name selling French Connection's flagship Ox= ford Street store for £38m in 2002, is back in property consultancy, for clients such as CoreNet Global. "If you work hard enough and you have good relationships then you can do well," he says.

Thompson: strategic consultant who didn't see it coming


"We've been doing very little looking back, and a l= ot of looking forward" Brian Thompson (front, right), and his Drivers Jonas strategic consulting team (behind, l-r): Martin West, Rob Colley, Graham Copeland, Ian Southall and Peter Gidman

"From a purely professional point of view, Chesterton's demise was the best thing that could have happened to us," says Brian Thompson, the former director of Chesterton's strategic services, whose 16-strong team was picked up by Drivers Jonas in the scramble that followed last March's collapse.

"Drivers Jonas has been able to grow the business more rapidly an= d go into areas more rapidly than would have been possible at Chesterton. It's been a good fit."

Now his team has been bolstered by Drivers Jonas's own embryonic strat= egic consultancy business as well as the company's ties to the public sector — an area Thompson say= s he had started to attack while at Chesterton. T<= /st1:PersonName>o cap things off, all his clients have remained on board, including the Northern Ireland government, which Thompson's team is advising on the outsourcing of its estate.

Despite the ease with which Thompson has managed the switch to Drivers Jonas, talking about the day Chesterton died is still painful. "There had been rumours and rumblings but our team had been doing well and we thought things across the company had bottomed out and were on the way up," he says. "The collapse came as a bit of a shock."

Ironically, his own team had achieved the best result in its decade-lo= ng existence.

He is reluctant to apportion blame for the collapse of the 200-year-old firm but when pushed points a finger at the layer of senior management ju= st below the board - the layer charged with running the company on a day-to-= day basis.

"Everyone had a part to play in looking after the corporate entit= y. Unfortunately, the reality was that many senior managers were more intere= sted in looking after their own at the expense of the corporate as a whole.&qu= ot;

But all of that is part of a quickly fading past, says Thompson. For now, it is business as usual. = "The Chesterton collapse is starting to feel = quite remote, partly because so much has happened in the past 12 months. We've = been doing very little looking back and a lot of looking forward."

Robeson: fighting in court over written-off investment=

Despite winning the latest legal skirmish against Mohammad Jafari-Fini, Chesterton's last chairman, Graham Robeson, is preparing for yet another = day in court.

Robeson was a trusted friend and colleague of Jafari-Fini's backer, Jonathan Rowland, and his father, Jersey based financier David.

For the last, fraught 15 months of Chesterton's life, he was in charge, after Jafari-Fini was removed. Robeson has no fond memories: "I try = to forget about it," he said outside court last year.

Unfortunately, he has been given little opportunity to forget, and says they have outstanding court costs and claims against Jafari-Fini totalling £16.6m.

After financing Jafari-Fini's takeover of Chesterton with a £12.= 9m loan, Rowland and his allies are waiting for receiver Grant Thornton to complete its work. "We did = the best we could," says Robeson. "But you have to remember we've l= ost the bulk of our investment we wrote it off a long time ago."

Taylor: t= he firm's residential side is ready to expand


"Once that's done, we'll be opening an office in a = new location roughly every six months, so that over the next five years we'= ll increase from 16 to 26 offices" David = Taylor, Chesterton residential

After a rocky ride last year, Chesterton's residential arm has not only survived intact but is now ready to expand, according to managing director David Taylor.

In reality, the residential business always managed to keep the walkou= ts, takeovers, and legal squabbles that plagued the commercial property divis= ion at arm's length.

Now the firm, mainly owned by Middle Eastern consortium CIC, has a £6m investment programme over the next five years and Taylor has set ambitious targets: "We w= ant a 50% increase in our market share and we want to increase our profits.&quo= t;

Taylor, who was in charge= of the residential division before Chesterton International collapsed, says = most of the company's 16 offices across London will be refurbished during the year. "Once that's done, we'll be opening an office in a new location roughly every six months, so that over the next five years we'll increase from a total of 16 to 26 offices," he says.

The 200-strong company is= also preparing new branding which will start spreading its way across the residential sales, rental and management business this year.

After a distracting 2005, albeit one in which the residential business allegedly made a profit, Tay= lor is keen to get Chesterton's core business back on track.

"Actually, we were never off track," he says. "It's just that people didn't notice."