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Foxtons Us May File For Bankruptcy

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Not sure if this was posted earlier:

Foxtons US may file for bankruptcy

By James Quinn, Wall Street Correspondent

Last Updated: 2:04am BST 28/09/2007

The US offshoot of upmarket estate agency chain Foxtons has hit the wall as a result of the collapse of the American housing market.

Foxtons North America is axing 350 of its 380 staff, winding up sales and rentals in New York and New Jersey, and is considering filing for Chapter 11 bankruptcy protection.

The US business is majority owned by multi-millionaire property entrepreneur Jon Hunt, who sold the separately held Foxtons UK to private equity house BC Partners in May for £390m, personally netting 97pc of the proceeds.

After selling Foxtons UK, Mr Hunt had hoped aggressively to expand the US business, using its strong franchise in the New York area as a stepping stone to other states.

But the US housing market is now in freefall in many states, with August sales data released yesterday showing an 8.3pc drop in new home sales last month, the worst in seven years.

"There comes a point when you can't stand in the way of a hurricane, and it is a property hurricane that we are facing," said John Blomquist, general counsel of Foxtons North America. "The company no longer has the liquidity to operate as a going concern."

In contrast to the company's reputation in the UK, where Foxtons is seen as a mainstream, upmarket player, in the US it has been something of a rabble-rouser, attempting to upset the status quo.

Foxtons first entered the US market in March 2000 after taking control of YourHomeDirect.com, an internet start-up, and was soon ruffling feathers by selling homes for fees as low as 2pc in a country where 6pc is the norm.

Although the two entities have always been separately owned – US venture capital firm Palisade owns a 15pc stake in Foxtons North America – there remain similarities between the two.

Mr Hunt exported the UK arm's recognisable green and yellow branding across the pond, even bringing the company's trademark green and yellow Mini Coopers to the streets of Manhattan.

Source: Telegraph

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I read a different article about it, seems that Foxtons US had an entirely different business model to Foxtons UK. In the US they had salaried staff with no commissions to avoid the huge commissions in the US (the article mentioned a ridiculous 6%!!!)

Of course that only works with high volumes, so even a slowdown kills with that level of fixed expenses.

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