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DJM - Statement of Affairs released

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Only from what is in the public domain 

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37 minutes ago, Edwardian said:

Was the crowdfunding undertaken via the Funding Circle?  I would have thought not, as I had understood the FC to be a source of private business loans, as opposed to banks who have more or less given up making money available to any small business who might actually need a loan. 

 

No, Funding Circle provide business loans as you say (funded by private investors), that’s nothing to do with crowdfunding. That’s all just gone into the ether. 

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29 minutes ago, Deltic said:

Seems perhaps odd that the scans/plans are seen as holding no value - as they must I assume include items already produced. So could have a resale - if small - value, wonder if they would be open to any offers being made.  As anything achieved above £0 is an improvement and this is what they will be seeking to achieve.

 

The £15K deposit is "uncertain" as they are not 100% confident of recovering any amount - so worse case option.

 

Shame, but this is not and may well not be the last Business to go to the wall.  Regardless of the feelings towards Dave he at least did try, and convinced people like the Funding Circle that it was a viable opportunity.

As with the tooling....value and realisation are two different things....

 

they might as well be magic beans, unless you want to use them to produce an APT at which point there is no way you will pay the value for them....unless you have money to just throw away....your going to get them as cheaply as possible!!!!

 

the cads are just drawings if you were to produce an APT they are about only 20% of the process..... theres still massive investment required for physical product.

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1 hour ago, Widnes Model Centre said:

 

If you speak to anyone in the industry, they don't agree.

 

I've spoken to Revolution several times. As the (now) main crowdfunding company in the industry, they would be more affected than most - but claim it has made no difference to their business.

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I've spoken to the liquidators this morning to ask why no consumer creditors were shown. Firstly it should be noted that this Statement of Affairs is that put forward by the Director and CG's investigatory process remains to be completed. At this stage they would not know an accurate list of who, and to to what value, are consumer creditors until any payment card refunds have gone through.

 

The message is to keep pressing card isssuers for refunds as, whatever happens, there's not going to be realisable refunds from the process - if you don't get a refund you could become listed as a consumer creditor but it won't get you anything back.

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The problem with accounts like these are that they only show the state of affairs on the final day.  It's possible that the £50,000 director input was money put in right at the start to enable the J94 to be produced. It doesn't explain why he needed to increase borrowing from FC when the projects were 'self funded' nor does it explain why he was owing money to Hattons when as a seller of products it should be the other way around.  Carrying that much debt with no new models for some times and nothing to be received for at least 9 months, it was fairly obvious that the company was unsustainable and had been for some time.  Quite what he said when he applied to FC for a loan is anyones guess but I doubt it was the truth or they wouldn't have lent.

 

What we all would want to see is where the income from the 'Crowdfunding' went, just what sort of day to day expenses were soaking this up as there is none left now from the J94, 71 plus the other projects for 3rd parties.    

Or was it really a case of the projects never really having enough sponsors behind them to get off the ground.  I suspect the latter and DJM were gambling that they would pick up more as the projects progressed. 

It's always easy to gamble with other peoples money.

 

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1 hour ago, njee20 said:

(snip)

Given there are several projects for which significant funds have been raised, but outlay has been minimal (92s, King, APT etc) there should be a healthy pot of money. (Snip)

 

Has there though? The thing that has surprised me is that both here and on NGf where the majority of the ‘marketing/communications’ appear to have taken place, we’ve seen relatively few CF’s making comments. It could be most have thought ‘#### it’ it’s not worth bothering with but I’d find that surprising. Anyone know roughly how many CFs attended the APT scanning party? Obviously it won’t be all of them, but the numbers at the time didn’t inspire. 

 

I wonder, (with the lack of filed accounts) if the tank was empty earlier than thought.

 

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What a mess. I don’t understand how those who have placed deposits have not been listed as creditors. Some form of list must exist for all the promotional emails that were being sent round.

 

Surely the £50k should be on the directors loan schedule. 

 

Presumably it was one of those with more information than us, ie funding circle or Hattons who had seen enough and encouraged this route. 

 

I wonder if the Hattons amount was in respect of returns. If so, they’ve probably been owed for quite some time. 

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2 minutes ago, PMP said:

 

Has there though? The thing that has surprised me is that both here and on NGf where the majority of the ‘marketing/communications’ appear to have taken place, we’ve seen relatively few CF’s making comments. It could be most have thought ‘#### it’ it’s not worth bothering with but I’d find that surprising. Anyone know roughly how many CFs attended the APT scanning party? Obviously it won’t be all of them, but the numbers at the time didn’t inspire. 

 

I wonder, (with the lack of filed accounts) if the tank was empty earlier than thought.

 

Yes, fair comment, but CADs are pretty cheap, and there's been basically no other outlay for the 92 at least, and it seemed to have quite a reasonable following across the two scales.

 

I'd suggest this is confirmation that Dave has reckoned on crowdfunders being investors, being rewarded with a model at some point, rather than creditors.

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12 minutes ago, AY Mod said:

I've spoken to the liquidators this morning to ask why no consumer creditors were shown. Firstly it should be noted that this Statement of Affairs is that put forward by the Director and CG's investigatory process remains to be completed. At this stage they would not know an accurate list of who, and to to what value, are consumer creditors until any payment card refunds have gone through.

 

The message is to keep pressing card isssuers for refunds as, whatever happens, there's not going to be realisable refunds from the process - if you don't get a refund you could become listed as a consumer creditor but it won't get you anything back.

 

3 minutes ago, chris p bacon said:

The problem with accounts like these are that they only show the state of affairs on the final day.  It's possible that the £50,000 director input was money put in right at the start to enable the J94 to be produced. It doesn't explain why he needed to increase borrowing from FC when the projects were 'self funded' nor does it explain why he was owing money to Hattons when as a seller of products it should be the other way around.  Carrying that much debt with no new models for some times and nothing to be received for at least 9 months, it was fairly obvious that the company was unsustainable and had been for some time.  Quite what he said when he applied to FC for a loan is anyones guess but I doubt it was the truth or they wouldn't have lent.

 

What we all would want to see is where the income from the 'Crowdfunding' went, just what sort of day to day expenses were soaking this up as there is none left now from the J94, 71 plus the other projects for 3rd parties.    

Or was it really a case of the projects never really having enough sponsors behind them to get off the ground.  I suspect the latter and DJM were gambling that they would pick up more as the projects progressed. 

It's always easy to gamble with other peoples money.

 

 

I think this is the significant thing the statement of affairs does not tell us. What is owed to the crowdfunders?

 

It seems from what Andy Y has said that, whatever this total, it is yet to be added to the total of unsecured creditors and I suppose that means that any modest dividend will be completely extinguished.  This is very regrettable, as it does suggest that anyone not able to recover from their card company will not recover anything.

 

Well, now we know.

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The tooling value of £68k is interesting.

 

1. Were told toolings cost 6 figures. (Ive seen figures suggested of £40k for a wagon, £50k for a ‘n’ loco thru £150k for a oo tender engine).

2. But If he didn't own the tooling then it cant be on the list of assets.

3. In 2017 accounts his fixed assets was £81k.

4. If Laser scans are fixed assets that gives a total of £101k in 2019.

 

At some point his accountant clearly allowed him to put a tooling on the balance sheet, and presumably did so through seeing a valid transaction that permitted it to be so.

 

I’d assume that theres depreciation over time from 2017 to 2019 of that tooling. (i recall looking at the time of the 71/J94 and being surprised at the low Fixed Assets values then)

 

Given the mermaid, J94, 71 and 17 were produced, take your pick as to which one it is that DJ owned, but for sure it wasn't all 4, but he cant claim to own something on the balance sheet that he didn't own in reality, so he owned something.

 

As for money.. £15k deposit for suppliers is interesting... I’m only able to assume that was for the king.

 

If you take a step back and look at it, theres a lot of activity (mermaid, 17,71,j94, £15k suppliers and £4k cash and £30k in laser scans  ), for only £100k of debt...

on that basis I suspect he didn't “own” very much...

 

That the fixed assets are written off means the liquidators wont be flying to China to discuss, so i’d imagine we’ll see those tooling again soon in a new name. they dont seem to have given up on the deposit of £15k, though deposits are exactly that... so I suspect its more the case of being a formality and we’ll see a revised statement in due course.

 

one name was thankfully missing of the list of creditors.. Digitrains, given their recent bad luck at the GCR that must be a bullet dodged. Hattons was a surprise, I wonder if that relates to work on the OO king as work was done but the project was only officially paused, there was a long term creditor listed for a few years.

 

 

Edited by adb968008
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12 minutes ago, Phil Parker said:

 

I've spoken to Revolution several times. As the (now) main crowdfunding company in the industry, they would be more affected than most - but claim it has made no difference to their business.

 

I have spoken to lots of people within the industry, indeed it is very much a topic under discussion. Crowdfunding aside.

 

Can we say that Hattons, Kernow, Durham Trains of Stanley, Digitrains to name but a few haven't been affected?

 

On a different note, anyone who has a DJM product that is under warranty. That Warranty now falls, I am led to believe on the retailer who sold it, not DJM. I have seen one such query on another forum only this morning.

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1 hour ago, Widnes Model Centre said:

 

If you speak to anyone in the industry, they don't agree.

 

I’ve not spoken to Hattons on this, but do speak to a variety of people across the hobby. No one I’ve spoken to has expressed any great surprise that DJM didn’t last. One or two have mentioned that Crowdfunding might be looked at in a different light, however it’s clear that the DJM version of Crowdfunding models was, and thought by many to be erm, unique..

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7 minutes ago, adb968008 said:

The tooling value of £68k is interesting.

 

1. Were told toolings cost 6 figures. (Ive seen figures suggested of £40k for a wagon, £50k for a ‘n’ loco thru £150k for a oo tender engine).

2. But If he didn't own the tooling then it cant be on the list of assets.

3. In 2017 accounts his fixed assets was £81k.

4. If Laser scans are fixed assets that gives a total of £101k in 2019.

 

At some point his accountant clearly allowed him to put a tooling on the balance sheet, and presumably did so through seeing a valid transaction that permitted it to be so.

 

I’d assume that theres depreciation over time from 2017 to 2019 of that tooling. (i recall looking at the time of the 71/J94 and being surprised at the low Fixed Assets values then)

 

Given the mermaid, J94, 71 and 17 were produced, take your pick as to which one it is that DJ owned, but for sure it wasn't all 4, but he cant claim to own something on the balance sheet that he didn't own in reality, so he owned something.

 

As for money.. £15k deposit for suppliers is interesting... I’m only able to assume that was for the king.

 

If you take a step back and look at it, theres a lot of activity (mermaid, 17,71,j94, £15k suppliers and £4k cash and £30k in laser scans  ), for only £100k of debt...

on that basis I suspect he didn't “own” very much...

 

That the fixed assets are written off means the liquidators wont be flying to China to discuss, so i’d imagine we’ll see those tooling again soon in a new name. they dont seem to have given up on the deposit of £15k, though deposits are exactly that... so I suspect its more the case of being a formality and we’ll see a revised statement in due course.

 

one name was thankfully missing of the list of creditors.. Digitrains, given their recent bad luck at the GCR that must be a bullet dodged. Hattons was a surprise, I wonder if that relates to work on the OO king ?

 

 

who do you think his accountant was????

 

Ill give you a clue....given the lack of identity on the accounts documents they were not an external entity!

 

this was by far for me one of the biggest early red flags.....

Edited by pheaton
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I am beginning to suspect that Dave was assuming that the tooling which existed for various models actually belonged to him to do with as he wishes and when the Chinese Factories pointed to their contract which he probably failed to read properly when he signed it and told him that was not the case was when he started rant and rave which was the beginning of the downfall.

 

As for the tooling itself, I am becoming increasingly convinced that we will never see anything made from it ever again. 

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1 minute ago, John M Upton said:

I am beginning to suspect that Dave was assuming that the tooling which existed for various models actually belonged to him to do with as he wishes and when the Chinese Factories pointed to their contract which he probably failed to read properly when he signed it and told him that was not the case was when he started rant and rave which was the beginning of the downfall.

 

As for the tooling itself, I am becoming increasingly convinced that we will never see anything made from it ever again. 

you never know hachette might do a part work on class 71s ;)

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Be the first time it would be quicker to get a model that way!

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1 hour ago, adb968008 said:

.... that said it was irrelevant as theres was nowt left.

 

That would seem to be the case here.

 

Picking over the statement of affairs (submitted by Dave Jones) is not like rearranging deck chairs on the Titanic.  It's more like meeting your waiter in the water and arguing about the quality of the meal that you ordered.

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31 minutes ago, Widnes Model Centre said:

 

I have spoken to lots of people within the industry, indeed it is very much a topic under discussion. Crowdfunding aside.

 

Can we say that Hattons, Kernow, Durham Trains of Stanley, Digitrains to name but a few haven't been affected?

 

On a different note, anyone who has a DJM product that is under warranty. That Warranty now falls, I am led to believe on the retailer who sold it, not DJM. I have seen one such query on another forum only this morning.

 

From the little I know about retailing, the guarantee is the responsibility of the retailer. Retailers often pass the issue back to the manufacturer, but where the manufacturer fails to repair or replace the item the responsibility rests with the retailer (sale of goods act).

 

A very sad state of affairs for all

Edited by hayfield
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5 minutes ago, hayfield said:

 

From the little I know about retailing, the guarantee is the responsibility of the retailer. Retailers often pass the issue back to the manufacturer, but where the manufacturer fails to repair or replace the item the responsibility rests with the retailer (sale of goods act).

DJ hasnt produced anything for a while, so stock out there is old.

As the J94/71 are sold heavily discounted anyway, i’d think an easy way of offsetting warranty at this point would be just to sell it as second hand / sold as seen.

Edited by adb968008
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1 hour ago, bigP said:

Well,

 

The statement of affairs makes an interesting read for sure.

 

So it would seem Mr Jones is listed officially as a creditor to the amount of £50,000, whilst the crowdfunding ‘crediting’ is not listed at all.

 

That should ensure that should there be any money left at the end of this mess (and I’m not suggesting there will be) he would get a payout whilst the crowdfunders loose everything.

 

Nice.

Yes, that came as a really big surprise (Not).  In fact I would have been amazed if he hadn't turned out to be the biggest creditor - so often the case in this sort of situation where the Director(s) are the ones with the biggest claims when they take a company into voluntary liquidation.  Strangely the Director's Loan hasn't appeared previously in the accounts so must only have been made since they were last filed or do such loans not have to be taken to account?

 

What I find peculiar however is some of the asset values.  The tooling at £68 grand is - as AY has said - obviously the tooling in dispute with the factory in China (although for whatever reason they are not listed as a creditor)  but why that had been written down in the accounts when ownership was disputed and why wasn't some of it an asset in 2016 but only appeared at £81K in 2017?   No doubt the CADs (which seem to have a remarkably high value for the few involved) are presumably also 'locked up' in the factory (and possibly with payment disputed/outstanding?).  In other words these are not unencumbered assets so can't be realised  (and never will be)

 

1 hour ago, Edwardian said:

The statement of affairs makes interesting, if depressing, reading, and I'm really sorry for the unsecured creditors.  The chief points seem to be:   

 

- The business owner funded principally through debt rather than equity.  His lost equity stake is £101.  His director's loan is £50K, making him owed nearly as much as everyone else.  Everyone else here appears to be Hattons and the Funding Circle.

 

- There are no preferential or secured creditors

 

- £103K of debt and less than £5K of assets. 

 

- The tooling and the "laser scans/plans" are worthless/unrealisable 

 

It leaves me with 3 questions:

 

-  Does the "laser scans/plans" include the infamous protected CADs?  Were these registered to the company or was this the personal IP of Dave Jones?

 

- Was the crowdfunding undertaken via the Funding Circle?  I would have thought not, as I had understood the FC to be a source of private business loans, as opposed to banks who have more or less given up making money available to any small business who might actually need a loan.  This quote from the Funding Circle website prompted some hollow laughter: "Rigorous credit assessment so you lend to creditworthy businesses and loans perform in line with our expectations".  Yeah, right.

 

- I don't know what the £15K deposit with supplier might be or why it's "uncertain". Perhaps money on deposit in China, or is this crowd-funder deposits?

 

Whatever the reasons for this result, the rights and wrongs etc, surely no one in this industry will ever do business with the former proprietor of this company again. 

 

 

I somehow doubt the IP'd items are included under CADs although they were registered in the name of the company.  So they are either accounted for elsewhere or have already been sold out of the company or they are considered to have no value (the latter being the most accurate in my view).

 

The Funding Circle money was probably the £45K which appeared in the last accounts and some of it has been spent.  What remains means that Mrs Stationmaster now has a small share of the money owed to creditors - I've told her to pull out of that fund PDQ as a friend of ours has already done.  They must have been daft to lend any money to this company so goodness only knows who else they might be lending to?

 

As expected the Statement of Affairs doesn't really tell us very much at all but as 'Edwardian' has said I doubt anybody in the model railway industry will ever again do any business with the former proprietor of this business.  Twice bitten forever shy perhaps?

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I e mailed the liquidators about the lack of reference to money owed to crowdfunders. I have just received the following email reply:

 

Good morning Mr McLeod



 

Unfortunately, I was not involved in the initial discussions with the Director or the compiling of the Directors report so it is difficult for me to comment. I can see from the file though that the Director had advised that the deposits were all part of a crowd funding scheme. 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.

 

Kind regards Stephanie

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As Funding Circle is made up of individual small personal  investors (you and me), putting any amounts of personal money into individual projects of their choice, I suspect we may find some of them on RMweb.

 

Anyone can open up an ISA and invest in funding circle, but not everyone would see a model railway company, than a motorbike reseller, coffee shop expansion etc as a good investment.

 

I suspect some of those who have lost via FC therefore, may frequent these pages.

Edited by adb968008
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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. 

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