DJM - Statement of Affairs released

[njee20]

1 hour ago, GWR-fan said:

I find it odd that even as late as the end of April,  Dave,  in an APT CAD update,  was encouraging people to buy more than one APT for possible sale on eBay. At this late stage he must have known,  or at the very least,  should have known that the company could not survive and yet was still encouraging sales.  

Well yes, because it's a business. You can't give up at the first hint of problems. Essentially you have to pretend everything is ok until it's clear that you really can't go on further. That's not odd at all, that's common sense.

[The Stationmaster]

28 minutes ago, PenrithBeacon said:

It wasn't so long ago that DJ was being hailed as the best thing since sliced bread but now he's being reviled as a failure; in truth he's somewhere in between of course.

The business model he adopted had two arms:

one being essentially being an agent for others who didn't have his experience was, in retrospect, a failure because those who contracted him to act as their agent could always cut him out after they themselves acquired the experience he had (and still has),

and secondly, crowd funding those projects that others wouldn't touch. This is inherently risky from a financial point of view.

The business has failed, which is not altogether a surprise, but DJ still has marketable skills for a future employer and the hobby could well still benefit from them.

I do wonder about the bit I have highlighted.  So far as we,  in the public arena, are concerned none of the concerns which I have heard of who had any sort of involvement with DJM have ever said why they parted company and they probably never will.   We simply do not know why they ceased to deal with DJM.  But one pertinent point to bear in mind is that virtually all of them (of those I know about) have either previously or, more relevantly, subsequently dealt with other manufacturing companies or intermediaries to produce commissioned models.  While they might well, and in several cases apparently, have gone direct to factories they have also commissioned models through the likes of Heljan or Bachmann.  

 

We don't know why they have done that - all we do know is that at some stage, and for whatever reasons, they ceased to deal with DJM and either took over the management of projects themselves (e,g Kernow with the D6XX), or have initiated projects themselves, or have gone through another 'manufacturer'/intermediary instead of DJM.   Were I to be an uncharitable soul I would be forming the impression that there was far more to it than 'acquiring the experience'.  And after all if you have 'acquired the experience' why go via another intermediary when it would no doubt be cheaper and quicker to deal directly with a factory?  Equally the odd thing is that a factory which somehow  was 'involved in a dispute' with DJM has quite happily carried on working with other UK customers including in one case on a project which at one time had a DJM involvement.   There might be, for all we know, more to it than 'acquiring the experience'?

 

 

 

.

[DavidH]

1 hour ago, Colin_McLeod said:

However you describe the crowdfunders, a percentage of the value of the finished model is due to them.

 

APT high estimate: £250 × 1,000 = £250,000

 

APT low estimate; £180 × £700 = £126,000.

 

Add the figures for the 92 and the King and even at low estimates the total creditors are a multiple of the figure in the statement of affairs.

 

The problem with these back of the envelope calculations is how would anyone other than Dave, his "accountant" and now the liquidator know that these are accurate figures?

I'll make a small prediction: the numbers signed up for the APT barely touch half those numbers. That might then explain why he was trying to get new sign-ups so recently rather than accepting defeat earlier: one last attempt to get enough sign-ups to cover whichever CAD or tooling bill he was about to commit to.

However, the problem for Dave being that as he used RMWeb almost exclusively as his active marketing channel, and then withdrew from it, he was pretty much limited recently to marketing to his own customers.

 

4 hours ago, Edwardian said:

... it was treated as a director's loan (for which there is not evidence as yet, I might add)

 

But there is one - £50,000. Bear with me, but is there a reason why this can't be the crowdfunded money, rather than deferred salary?

 

[woodenhead]

2 minutes ago, The Stationmaster said:

I do wonder about the bit I have highlighted.  So far as we,  in the public arena, are concerned none of the concerns which I have heard of who had any sort of involvement with DJM have ever said why they parted company and they probably never will.   We simply do not know why they ceased to deal with DJM.  But one pertinent point to bear in mind is that virtually all of them (of those I know about) have either previously or, more relevantly, subsequently dealt with other manufacturing companies or intermediaries to produce commissioned models.  While they might well, and in several cases apparently, have gone direct to factories they have also commissioned models through the likes of Heljan or Bachmann.  

 

We don't know why they have done that - all we do know is that at some stage, and for whatever reasons, they ceased to deal with DJM and either took over the management of projects themselves (e,g Kernow with the D6XX), or have initiated projects themselves, or have gone through another 'manufacturer'/intermediary instead of DJM.   Were I to be an uncharitable soul I would be forming the impression that there was far more to it than 'acquiring the experience'.  And after all if you have 'acquired the experience' why go via another intermediary when it would no doubt be cheaper and quicker to deal directly with a factory?  Equally the odd thing is that a factory which somehow  was 'involved in a dispute' with DJM has quite happily carried on working with other UK customers including in one case on a project which at one time had a DJM involvement.   There might be, for all we know, more to it than 'acquiring the experience'?.

I remember the Gate Stock experience, right at the end there was a demand made for cash up front to release the stock, alarm bells sounded then but it seemed to pass.

[DavidH]

5 minutes ago, The Stationmaster said:

qually the odd thing is that a factory which somehow  was 'involved in a dispute' with DJM has quite happily carried on working with other UK customers including in one case on a project which at one time had a DJM involvement.

 

Would that be the factory making the model that Kernow requested advance payment for a while back? Was that the gate stock or the Bulleid diesels?

[Phil Parker]

1 hour ago, PenrithBeacon said:

It wasn't so long ago that DJ was being hailed as the best thing since sliced bread but now he's being reviled as a failure;

 

 I remember those days. No end of people predicting the end of the larger firms because all these one-man-bands were more agile and thanks to lower overheads, "producing" cheaper models. They could do no wrong. All we have proved, not just with DJM, is that a larger firm is more resilient.  What Dave was trying to do is hard, if it wasn't, more people would be doing it successfully.

[Colin_McLeod]

7 minutes ago, DavidH said:

 

The problem with these back of the envelope calculations is how would anyone other than Dave, his "accountant" and now the liquidator know that these are accurate figures?

I'll make a small prediction: the numbers signed up for the APT barely touch half those numbers. That might then explain why he was trying to get new sign-ups so recently rather than accepting defeat earlier: one last attempt to get enough sign-ups to cover whichever CAD or tooling bill he was about to commit to.

However, the problem for Dave being that as he used RMWeb almost exclusively as his active marketing channel, and then withdrew from it, he was pretty much limited recently to marketing to his own customers.

 

 

But there is one - £50,000. Bear with me, but is there a reason why this can't be the crowdfunded money, rather than deferred salary?

 

 

Money owed to David is  a Director's loan.

 

Money owed to crowdfunders is not a Director's loan.

 

So the debt owed to the crowdfunders is either incorrectly described as a Director's loan (unlikely) or is not mentioned at all (more likely)

 

Not mentioned for reasons known only to Dave  or lack of accounting skills.

[Ravenser]

1 hour ago, Colin_McLeod said:

Unless Dave Jones is a rich man it is probably academic whether a crowdfunder's claim is against DJmodels or against Dave Jones personally.

 

What I find appalling is the absence of any figure in the creditors side for the value owed to the crowdfunders. By failing to include it, and thus understating the total, will significantly increase the percentage pay out expressed as "pence in the pound" . This would be to Dave's personal advantage as he has listed himself as a £50k creditor. 

 

There is a conflict of interest here relying on a statement of affairs that has been prepared by one of the creditors.  The liquidators need to do their own statement of affairs. 

 

However you describe the crowdfunders, a percentage of the value of the finished model is due to them.

 

APT high estimate: £250 × 1,000 = £250,000

 

APT low estimate; £180 × £700 = £126,000.

 

Add the figures for the 92 and the King and even at low estimates the total creditors are a multiple of the figure in the statement of affairs.

 

 

 

I would disagree with your "low estimate" . He was seeking 400 crowd-funders to sign-up for the N gauge APT

 

If the number was the same for OO , and if Dave Jones proceeded with less than the full number (say 300) in the hope that posting the CAD would shake some more birds out of the trees - the fact he was still touting for new crowdfunders in April might support this -  , then the low estimate becomes :

 

£180 x 300 =  £54,000

 

It's still a lot of money missing from the Statement of Affairs though.

 

If you assume 1000 crowdfunding orders for the 92 in each scale and the King, each at £30 you get :

 

High estimate £30 x 3000 = £90,000

 

More  realistically (the King was certainly under-subscribed)

 

Low estimate - 850 on OO 92 + 700 on N 92 ; 500 on N gauge King

 

£30 x 2050 - £61,500

 

There really should have been somewhere between £100K and £200K of crowd-funding money in there somewhere (min £50K on APT , plus min £50K on 92 + King), and some posters are suggesting that CAD is fairly modest cost . A scanning party and CAD for two vehicles can't possibly have cost £50K.......

 

I'm guessing that Dave Jones did in fact take the stance that crowd-funding monies were an unregulated investment, non-returnable in the event of failure, when compiling the Statement of Affairs.

 

Even if you assume that Dave was taking a decent salary out of the business for several years , he really shouldn't have burnt through £100K of crowd-funding just supporting himself 

 

This tends to force us into assuming either

 

- Most of the crowd-funding money actually crowd-funded Dave Jones for several years , or

- The actual numbers who signed up as crowd-funders were pathetically low

 

But both of those possibilities seem to strain credibility a little. 

[The Stationmaster]

20 minutes ago, DavidH said:

 

Would that be the factory making the model that Kernow requested advance payment for a while back? Was that the gate stock or the Bulleid diesels?

I believe the factory changed their payment terms and began to ask to a much greater extent for money upfront, especially for the really expensive parts of the process, instead of being paid for work done.  I don't know what caused them to change their approach although it made me wonder if they'd had problems with another customer over securing payment for work done.   I understand that some other factories now take a similar attitude.

Edited June 27, 2019 by The Stationmaster

[Edwardian]

7 minutes ago, DavidH said:

 

 

 

But there is one - £50,000. Bear with me, but is there a reason why this can't be the crowdfunded money, rather than deferred salary?

 

 

Hi David.  My point was that there is no evidence that the £50,000 loan included or represented crowdfunders' money, which some here have speculated might have been the case. 

 

There is evidence of a director's loan in the form of the statement of affairs that Mr Jones prepared for the liquidators.  There is no evidence of when it was made, however, because the micro-accounts do not identify any director's loans. 

 

Whether Mr Jones understands what can or cannot be regarded as a director's loan is yet another area of speculation! But, I've no grounds for going behind what he has said, and neither in all probability has anyone else here.

 

Just now, Colin_McLeod said:

 

Money owed to David is  a Director's loan.

 

Money owed to crowdfunders is not a Director's loan.

 

So the debt owed to the crowdfunders is either incorrectly described as a Director's loan (unlikely) or is not mentioned at all (more likely)

 

Not mentioned for reasons known only to Dave  or lack of accounting skills.

 

That looks like a correct statement.  I make no assessment of the probability of crowdfunder money either not reaching the company or reaching it via a director's loan.  These suggestions have been made by others but remain speculation, fuelled no doubt by the absence of an explanation in the statement of affairs.   There is no apparent evidence in support of these suggestions, however. 

 

We should not get carried away throwing these theories about; these are serious matters to lay at the door of an individual without facts to back them up.

[GWR-fan]

26 minutes ago, njee20 said:

Well yes, because it's a business. You can't give up at the first hint of problems. Essentially you have to pretend everything is ok until it's clear that you really can't go on further. That's not odd at all, that's common sense.

 

An inability to meet short term debt but still inviting deposits may be business, however, the debt situation at DJM was not short term.  

[hayfield]

On 25/06/2019 at 10:46, chris p bacon said:

I note the words in the statement from the liquidators

 

After the report was signed by the Director and circulated, further information came to fruition which brought ambiguity to the crowd funding scheme and it was then decided that the deposit creditors should be invited to prove in the Liquidation.

 

That looks on the face of it to suggest that DJM were not wholly truthful in their declaration to the liquidators about monies owed or their source. But then it was paid in to his personal paypal and bank account for some time. 

 

I do wonder if there should be more rules to protect investors when investing large sums of money in these ventures, as consumers we are getting used to the term of crowdfunding in different forms thinking it is a risk free safe form of venture, there is a world of difference between giving away a few £'s to a good cause and investing several hundreds of £'s into a commercial venture. On one of the posts in this or its sister thread a prospectus/add was up loaded from the company and there was a clear warning that "your money was at risk." To me than means alarm bells should be ringing

 

Now there is a lot of difference between £20 to £50 than a hundred or several hundred £'s on a speculative punt. Sadly talented model makers normally do not make great business people, our hobby is full of failed enterprises, both big and small, just look at the problems Hornby got itself into. Perhaps this is a lesson to us all  

[Taz]

4 minutes ago, Ravenser said:

...........

Even if you assume that Dave was taking a decent salary out of the business for several years , he really shouldn't have burnt through £100K of crowd-funding just supporting himself 

 

This tends to force us into assuming either

 

- Most of the crowd-funding money actually crowd-funded Dave Jones for several years , or

- The actual numbers who signed up as crowd-funders were pathetically low

 

But both of those possibilities seem to strain credibility a little. 

 

Not necessarily un-credible. 

If Dave drew a salary of £50k a year it wouldn’t take long to burn through that crowd funding money, especially as income from his own products was sporadic at best.

[Chris Higgs]

On 25/06/2019 at 16:54, spikey said:

 

If it did, it doesn't look like anybody was taking much notice of it ...

 

You have to have one for HMRC anyway, so it is not that great a benefit not to have to file one to Companies House.

 

Chris

[letterspider]

I have nothing to say

[Legend]

28 minutes ago, Phil Parker said:

 

 I remember those days. No end of people predicting the end of the larger firms because all these one-man-bands were more agile and thanks to lower overheads, "producing" cheaper models. They could do no wrong. All we have proved, not just with DJM, is that a larger firm is more resilient.  What Dave was trying to do is hard, if it wasn't, more people would be doing it successfully.

 

Like Cavalex, Accurascale, Hattons, Kernow

 

Agree you have to have the capital base and a clue how to run a business, proper records for starters

[Phil Parker]

Can we knock it off with calculations based on numbers pulled out of thin air. It's possible to draw all sorts of conclusions based on made up numbers but those conclusions aren't likely to be right. 

 

While I'm not removing posts, it's probably time to calm this down. Remember, this all has potential legal consequences. If you can't be confident standing up your assertions in a court of law, please think twice about making them.

 

The liquidators will have a better idea of the real numbers than we do and will make decisions based on those.

[atom3624]

I had made a £30 deposit for a Class 92 perhaps 3 hours before Accurascale announced that they would be making one - which had me frothing under the collar a little.

 

I had thought, after the recent developments that there would be no chance of seeing that again, and that I had paid, as often, via Paypal.

 

I decided to review rather than simply assume, and I had paid with my Debit card.

I rang up my bank and after a prolonged 'hold' pending the relevant person, was actually talked through the process, which gives a little hope I may see something ... never know.

 

As I said to the nice lady at the time, 'nothing ventured ... ' !!

 

This thread has been very helpful in the contained information which I needed to support my claim.

 

Al.

[letterspider]

You should be able to get money back from Paypal due to item not received if within the deadline?

[truffy]

34 minutes ago, hayfield said:

On one of the posts in this or its sister thread a prospectus/add was up loaded from the company and there was a clear warning that "your money was at risk." To me than means alarm bells should be ringing

That’s just standard warning text though. Like ‘the value of your investment...’ and ‘past performance...’ etc

[JSpencer]

15 hours ago, Gibbo675 said:

As has DJM and his delicate plastic models  project plans.

 

Go figure ?

More like this no?

[woodenhead]

56 minutes ago, Legend said:

 

Like Cavalex, Accurascale, Hattons, Kernow

 

Agree you have to have the capital base and a clue how to run a business, proper records for starters

And turn up at exhibitions with a professional stands manned by employees not mates and not be selling yours and other's personal second hand stock.

 

People may be looking for a smoking gun that Dave somehow spirited away the crowdfunding monies for himself - if that was the case he probably wouldn't have been selling his own personal N gauge locos and stock on his trade stall at Warley and Stafford.  Clearing out returns, NQP and your own new models at a trade stand is fine, selling your own personal items should have raised alarm bells.

[Grovenor]

What is not shown in the "Statement of affairs" is the income and expenditure account. I would suggest that DJ saw the stage payments as income and duly spent it on design work, CADs, air tickets etc. and considers that to be done and dusted. ie. nothing is owing to those who made stage payments as they knew it was money at risk should the models not be deliverable.

Rgds

[DavidH]

22 minutes ago, woodenhead said:

Clearing out returns, NQP and your own new models at a trade stand is fine, selling your own personal items should have raised alarm bells.

 

It did, but people have to be willing to listen.

[Colin_McLeod]

OK I'll not mention numbers, just principles.

 

There has been discussion of where the crowdfunders money went and what it was spent on.

 

Irrespective of where it went and what it was spent on, I keep coming back to the fact that the crowdfunders should appear as creditors. The liquidators have already decided that crowdfunders should prove the debt, so CG appear to consider crowdfunders as creditors.

 

If we were investors and the company made a profit how much of that profit would have been shared with the "investors"?  I got no paperwork about that.

 

If we "invested" in anything it was in an APT, King or 92.  Not in the company.