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DJM, the end.

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9 minutes ago, The Stationmaster said:

So now the nonsensical IP announcement might actually make some sense (although I'm not at all sure to who).  Whether or not the IPs are assets could be an interesting point of debate, plus also wj ho they are registered to.

 

Intellectual property is definitely an asset. But whether it's worth anything is a different matter. To be worth something it has to have a sale value. And it will only have a sale value if it's useful to someone else. Most of DJM's competitors are perfectly capable of generating their own designs, and have no need of purchasing any from a third party. It might, theoretically, be possible for a commissioning client to buy the IP to the model they have commissioned and then take it to another manufacturer to complete. But the biggest cost is the tooling, and they're unlikely to be able to take that with them. So, in practical terms, I suspect that the IP is almost certainly worthless.

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1 minute ago, DavidH said:

 

 

These contradict each other.

Follow my link on the post, it takes you to the insolvency practitioner whose information I used for the post.

 

There was a change in the law, I was still under the impression myself that HMRC came top of the list when I was looking it up but it's clearly changed.

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10 minutes ago, The Stationmaster said:

... The other interesting point is exactly how any potential Chinese factory creditors enter into the equation ...

 

And it gets even more interesting when you consider which country's legislation will govern any agreements 'twixt DJM and the Chinese supplier(s).

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2 minutes ago, DavidH said:

 

 

These contradict each other.

From Companies House here.

Quote

 

There are specific rules regarding distributions however the general order is:

 

Secured creditors

Preferential creditors (employees)

Unsecured creditors (trade creditors, suppliers, customers, HMRC)

Shareholders or members

 

The likelihood of the dividend and its timescale will be in the administration proposals.

 

It is worth noting that April 2020 may bring changes to the statutory order of creditors as it was recently announced HMRC is to be a preferential creditor with respect to certain taxes.

 

 

HMRC did used to be top of the tree as was said, and may move up again next year!

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Posted (edited)
19 minutes ago, The Stationmaster said:

So now the nonsensical IP announcement might actually make some sense (although I'm not at all sure to who).  Whether or not the IPs are assets could be an interesting point of debate, plus also wj ho they are registered to.

 

The other interesting point is exactly how any potential Chinese factory creditors enter into the equation but could there be a situation where if they have not been paid for work performed that work becomes their properety in lieu of payment and they can then sell it to the highest bidder?  (Which might raise also the IP situation?)

 

Dave more than likely saw the collapse on the horizon (before that infamous announcement) and as one last act of defiance to the Chinese secured the IP on the CAD's which the tooling may be based thus trying to stop the Chinese from selling them to a rival in the UK or producing the model themselves for the UK market which would be the least likely scenario out of the two...either way it may end up the Chinese have the tools but can't do s**t with them.

Edited by classy52
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If DJM goes out of business that's not worth anything.

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1 minute ago, classy52 said:

 

... it may end up the Chinese have the tools but can't do s**t with them.

 

Hmmm.  I wonder what the Mandarin equivalent is of "possession is nine tenths of the law" ...

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Posted (edited)
2 minutes ago, spikey said:

 

Hmmm.  I wonder what the Mandarin equivalent is of "possession is nine tenths of the law" ...

 

...very true

Edited by classy52

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I get the feeling that there is a lot more too this and that in many ways DJ Models has been overtaken by events and something close to a perfect storm. What with other companies announcing the same models, with tooling supposedly ceased in china and with less capital than others to get started, its been hard to for DJ Models. I know Dave will likely come in for some flak, because of decisions made, options taken or how some circumstance has come about - but its looking like the company is failing and regardless of faults or what has happened, its very sad to see this possibly come-about.  

 

Its sad that livelihoods will be lost and those that have paid in for crowdfunding will now possibly loose out or get little back in return. While the company endeavoured to continue against strong headwinds, some of the bashing and tribalism that has been displayed on this forum and in the wider community wont have helped matters.

 

Perhaps there's a lot of lessons to be learned from this chapter in model railways long history, if some of the ideas and practice that DJ Models started (like crowdfunding and IP rights) will be taken further.

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DJ Models didn't start the idea or practice of Intellectual Property Rights, in this industry or any other.

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15 minutes ago, spikey said:

 

And it gets even more interesting when you consider which country's legislation will govern any agreements 'twixt DJM and the Chinese supplier(s).

It will be what ever the contract says it is.

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42 minutes ago, njee20 said:

Customers are all unsecured creditors, which are the last to get paid, and will potentially get a proportion of what they are owed once all the assets have been realised. I can't imagine there are many assets, a bit of stock, maybe some tools if they can be released, but that seems comparatively unlikely, so I'd certainly get onto your banks/card providers ASAP.

 

Yes. My understanding is that anyone who paid on credit card should be covered by their credit card provider under Section 75.  The locos were all priced over £100 so you should be fully covered, even if you only paid the deposit.

 

There is a template letter below which may be useful.

 

https://www.which.co.uk/consumer-rights/letter/letter-to-credit-card-if-company-goes-bust

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Presumably in all this the company assets will be sold to pay some of the debts - not sure what in terms of equipment in their old UK offices will be such as computers and phones etc. But obviously the tooling in China will be classed as such, so mermaids and sharks will hopefully be bought by someone who can produce from them such as Dapol, its matters such as the King and 92 which will now having not be tooled have nothing to produce from, even then those who ordered Kings (I had 2 ordered myself and had paid 50% deposit for each) and 92's will certainly be left without models now

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Just now, Ed-farms said:

Presumably in all this the company assets will be sold to pay some of the debts - not sure what in terms of equipment in their old UK offices will be such as computers and phones etc. But obviously the tooling in China will be classed as such, so mermaids and sharks will hopefully be bought by someone who can produce from them such as Dapol, its matters such as the King and 92 which will now having not be tooled have nothing to produce from, even then those who ordered Kings (I had 2 ordered myself and had paid 50% deposit for each) and 92's will certainly be left without models now

Dave was a one man business - i suspect the address on his site is a residential address and he will have been using personal equipment, I wouldn't expect a great deal in terms of office assets if at all.

 

The assets will be whatever remaining stock he has and possibly his CADs - if he has proven he owns them, he had paid for them and they had handed them over.

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Oh well that’s £67.50 that I will never see again. It was always a risk. I’m disappointed but not surprised.

 

I think Dave tried but he just isn’t a businessman. The web site is currently open and I guess accepting payments.

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Does anyone know if you paid the deposit by Paypal are you protected through them ?   I ask because it appears that I used a Paypal balance for mine (which is unusual for me as I normally set the default payment to a credit card for additional protection).

 

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8 minutes ago, Karhedron said:

 

Yes. My understanding is that anyone who paid on credit card should be covered by their credit card provider under Section 75.  The locos were all priced over £100 so you should be fully covered, even if you only paid the deposit.

 

There is a template letter below which may be useful.

 

https://www.which.co.uk/consumer-rights/letter/letter-to-credit-card-if-company-goes-bust

I guess this is where we find out what happens when a crowdfunding initiative fails, there has been a lot of debate.

 

My experience of working for a Credit Card issuer was that Section 75 claims were resisted unless it was a travel company collapse.

 

I can't see that having changed much in the 30 years since I was doing it so expect some resistance when the claims first go in.

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25 minutes ago, njee20 said:

Unsecured creditors (trade creditors, suppliers, customers, HMRC)

 

There may different levels within that for HMRC. NI, VAT, Corporation tax etc - some higher than others.

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Posted (edited)
30 minutes ago, classy52 said:

 

Dave more than likely saw the collapse on the horizon (before that infamous announcement) and as one last act of defiance to the Chinese secured the IP on the CAD's which the tooling is based thus trying to stop the Chinese from selling them to a rival in the UK or producing the model themselves for the UK market which would be the least likely scenario out of the two...either way it may end up the Chinese have the tools but can't do s**t with them.

Or someone buys the IP for a nominal amount from the creditors, who has a good working with relationship with China already established.. and in which case can turn something from the tooling in their own name.

Sadly though it wont be an APT or a 92, more likely Class 17, J94 and some N gauge wagons. 

 

As for CADs.. I wouldn't hold much out for anyone wanting them, probably one for the back burner.

However it might take a long time, and I doubt there's too much rush from anyone, especially if one sets price high and the other sets price low.

 

Looks like it's the end, best buy your DJ J94 / Class 71 now they might become rare.

Edited by adb968008

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4 minutes ago, 47348scrh said:

Does anyone know if you paid the deposit by Paypal are you protected through them ?   I ask because it appears that I used a Paypal balance for mine (which is unusual for me as I normally set the default payment to a credit card for additional protection).

 

Dave was meant to have refunded all deposits taken from Paypal as they view Crowdfunding as risky (seems they were proven correct).

 

If Dave hasn't refunded you already then it may be you were one of the few whose money was already spent.

 

I would raise a case with Paypal and see where it takes you, as they don't support Crowdfunding they might have a mechanism to extract the funds.

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4 minutes ago, 47348scrh said:

Does anyone know if you paid the deposit by Paypal are you protected through them ?   I ask because it appears that I used a Paypal balance for mine (which is unusual for me as I normally set the default payment to a credit card for additional protection).

 

My understanding from the CAB website is that PayPal payments made by credit card (which is my situation) are not covered:

 

"You can’t use section 75 if you paid through a third party - like PayPal, Amazon third-party sellers, a travel agent or a group buying company like Groupon or Living Social."

 

But that you may still be able to initiate a credit card chargeback via Paypal:

 

"Ask for chargeback within 120 days (about 4 months) of when you paid or noticed the problem. You won't be able to ask if you noticed the problem more than 540 days (about 18 months) after you paid. If the seller disagrees with your claim, ask your card provider how to appeal under the chargeback scheme.

You won’t be able to use chargeback if you used your debit or credit card to put money into your PayPal account and then use that money to buy something." 

 

Hope this helps - full details here: https://www.citizensadvice.org.uk/consumer/somethings-gone-wrong-with-a-purchase/getting-your-money-back-if-you-paid-by-card-or-paypal/ 

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29 minutes ago, spikey said:

 

Hmmm.  I wonder what the Mandarin equivalent is of "possession is nine tenths of the law" ...

 

Ask Hornby.....

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7 minutes ago, Chris M said:

Oh well that’s £67.50 that I will never see again. It was always a risk. I’m disappointed but not surprised.

 

I think Dave tried but he just isn’t a businessman. The web site is currently open and I guess accepting payments.

A very sensible viewpoint. Have DJM actually been declared insolvent ?; IANAL but I recall continuing to trade when insolvent is illegal.

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2 minutes ago, adb968008 said:

Or someone buys the IP for a nominal amount from the creditors, who has a good working with relationship with China already established.. and in which case can turn something from the tooling in their own name.

Sadly though it wont be an APT or a 92, more likely Class 17, J94 and some N gauge wagons. 

 

However it might take a long time, and I doubt there's too much rush from anyone, especially if one sets price high and the other sets price low.

That all assumes that for the models that never reached production that Dave doesn't owe those companies money for which they might claim ownership of any assets related to that work.

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Just to be clear, HMRC was traditionally a preferred creditor, but lost that status following the Enterprise Act 2002.  I understand that it will partially regain that status in April 2020, in relation to taxes paid by employees and customers that a company collects on behalf of HMRC, e.g VAT, PAYE, and employees’ NIC.

 

Thus, HMRC will stand in the queue with other unsecured creditors, e.g. crowdfunders, of DJ Models, behind any secured creditors, e.g. any bank that might have lent money to the business on security (I don't recall seeing any registered charges on Companies House).

 

I believe that employees remain preferential creditors, so any unpaid salary and holiday pay to which the proprietor, qua employee, might have been entitled would have priority. Of course, as investor, Mr Jones is likely to have lost out, but he may be a or the major unsecured creditor if his investment took the form of debt, not equity. 

 

 

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