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DJM - Statement of Affairs released

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2 minutes ago, Colin_McLeod said:

I can see from the file though that the Director had advised that the deposits were all part of a crowd funding scheme.

 

That implies that DJ had not included any crowdfunders/deposit placers in the statement whilst CG now believe they should have been. A black hole.

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Starting to remind me of this...

 

Hole2Lge.jpg

 

Its definitely a crowd staring into a black hole..

Those who funded it, are still awaiting to have the loco in that hole delivered.. 127 years later.

Edited by adb968008
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12 minutes ago, adb968008 said:

As Funding Circle is made up of individual investors, putting any amounts of personal money into individual projects, 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.

As you might not have noticed in my post above Mrs Stationmaster has money in Funding Circle.  I have told her this morning to get it out PDQ because if they lend to concerns like DJM (without, to my mind, any sort of proper or extensive due diligence) goodness only knows who else they are giving money to.  As it happens their returns on investment have dropped significantly over the past 18 months (more bad decisions?) and our friend who originally recommended them has already taken his money out.   If I'd known they were going to lend money to DJM I would have told her to get her's out a long time ago.

Edited by The Stationmaster
Edit to correct a typo
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45 minutes ago, adb968008 said:

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.

 

Anyone selling as Business or as a retailer would still have to offer a Warranty. Sold as seen doesn't wash.

Edited by Widnes Model Centre
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1 hour ago, adb968008 said:

 

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.

 

 

 

 

 

At this size of business, the accountants base their figures on the information passed on to them. They don't forensically audit all the transactions.

 

And they caveat the accounts to put the blame for any inaccuracies on the directors/owners.

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According to some hereabouts Dave was the company accountant which would explain a few things...

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2 minutes ago, PenrithBeacon said:

I think this affair might put an end to crowd funding!  

 

As several people have alluded to, DJM's approach was a long way from true crowd funding. He took the money up front, but that's about the only similarity. In the world of electronics or other areas where crowdfunding is common, he would have been laughed out of the room, I'm sure.

 

In general though, crowdfunding, across all sectors, had it's time as the big shiny new thing, and applied to far too many projects where it wasn't suitable. Compare with the dot-com boom of the noughties. It's probably a good thing to kill the boundless enthusiasm and bring a reality check.

 

That doesn't mean it doesn't have a place, and I'm sure it will settle down into that niche. I would have no hesitation at funding more RevolutioN projects, as they've always been well thought through, detailed, and transparent.

 

I'm sure some will be quick to throw the baby out with the bathwater. Some projects will still "pass the reality check" and there's no reason to dismiss them.

 

J

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I am a Chartered Accountant but have never seen or been involved in any crowdfunding schemes and so don't know the specific accounting requirements for it .  However I am very surprised that crowdfunders don't appear anywhere in this statement . That to me is basic.   At the receipt of money the basic accounting transaction would be Debit Cash , Credit Liability to Crowdfunder .   The company can then go on to do what it wants with the cash eg spend money on CADS , tooling etc , the money is either expensed or its an asset (eg tooling).   However the fundamental point I'm getting at is that the initial record remains ie Credit Liability to Crowdfunders , so I would have expected an amount made up of all the £30 deposits for 92s and whetever it was for APTS (£250?) to be shown in the statement . And there should be a list by name of who paid deposits .    And now I think back to the somewhat chaotic requests for deposits, paypal  refunds etc and wonder if all these receipts have been properly accounted for .   Crowdfunding was surely fundamental to the DJM business, I would have expected basic enquiries to reveal that , so where is the record of all monies received?  I think CG really need to investigate more. At the most basic level they may need to go back to bank statements to see what money was received and figure out where it came from .     This might be an Initial Statement of Affairs but , at best its incomplete, there must be more to come.

 

Edited by Legend
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3 minutes ago, Legend said:

 I think CG really need to investigate more. 

 

But is it in their interests to do so? looking at the figures there's little chance of them being paid much as it stands, no point in them wasting more time, just wrap it up ....

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1 minute ago, PenrithBeacon said:

I think this affair might put an end to crowd funding!  

I think not and certainly hope not. Revolution have  proved themselves totally reliable. This bad egg on the other hand should be seen in isolation. It must be obvious to all now that the stories of woe over the past xx months and xx years were nothing more than a smoke screen to deceive and mislead, some may even say a degree of criminality, whatever, I don't think is helpful to tar all other concerns using 'crowd funding' with the same brush, just remember who was involved with this one and avoid/ ignore in the future.

Perhaps rules concerning 'crowd funded' projects and the accounts where the monies rest need to be made more water tight along the lines of making them accessible  to the crowd funders  to prevent those funds from falling in to black holes of any kind!

Duncan

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5 minutes ago, RedgateModels said:

 

But is it in their interests to do so? looking at the figures there's little chance of them being paid much as it stands, no point in them wasting more time, just wrap it up ....

 

There's a legal obligation for them to establish the actual position , that's both assets and liabilities , and certainly its a legal obligation on the Director to keep proper books and records .  This really is fundamental

Edited by Legend
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40 minutes ago, 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. 

 

This is a very interesting piece of information, could it be that if money was paid to him personally then is he personally liable ?. If the paypal account was not in the companies name then this must open up a big can of worms to who is actually liable, perhaps even bringing Paypal into the situation

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28 minutes ago, PenrithBeacon said:

I think this affair might put an end to crowd funding!  

Very sweeping statement. It depends on who is running it and how it is done. DJM had red flags all over it in regard to the who and the how.

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4 minutes ago, hayfield said:

If the paypal account was not in the companies name then this must open up a big can of worms to who is actually liable, perhaps even bringing Paypal into the situation

I'd be surprised if this hasn't happened before and Paypal haven't covered their tusch.

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I'm glad that I purchased some additional Mermaids from Hattons a few days ago as they are now almost sold out. Regrettably these could become collectors items for all the wrong reasons.

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27 minutes ago, Joseph_Pestell said:

 

Removed content - AY

There is another interesting point as well.  The micro accounts (for what good they are) appear to imply that there was depreciation on the fixed assets (i.e the disputed tooling).  If that depreciation was used as an offset for taxation it raises another interesting question although I presume that really is beyond the remit of the liquidator (or do they have to ensure that HMRC is not a creditor?).  Overall I suspect there is going to be an awful lot more t come out if the liqyidators are made aware or become aware of various things which have been happening such as the payments seemingly being made to private accounts instead of company accounts.

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1 hour ago, Widnes Model Centre said:

Anyone selling as Business or as a retailer would still have to offer a Warranty. Sold as seen doesn't wash.

But your exposure is only the purchase price refund on any that come back.

 

Option of sale as a static item only, by removing the decoder plug and aralditing the access shut - for a commensurate price reduction.

 

 

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2 hours ago, AY Mod said:

 

That implies that DJ had not included any crowdfunders/deposit placers in the statement whilst CG now believe they should have been. A black hole.

 

I have still not understood what the status of the crowdfunder's money is.

 

Unless held in trust/ringfenced, I imagine that, once paid to the company it becomes the company's money.  As such, any unspent funds form part of the company's assets.  If spent, well, it's gone.

 

The question, then, is whether there was any binding commitment to produce product in exchange for the funding?  If not, the crowdfunders might not in fact be creditors.  

 

This is academic in a sense because, were they to be added to the unsecured creditors, it seems most unlikely that they'd see any pence in the pound from the Liquidator anyway., but does anyone actually know the status of the crowdfunders?  

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Here is a thought.

 

If all the crowdfunders cash was deposited in DJM’s personal account/PayPal  rather than a business account and he subsequently transferred that cash into the business, could that not explain the £50k Director loan?

 

In the books, the money came from him, but it was actually YOUR cash and he becomes the creditor a bit further up the tree from the individuals.

 

IIRC, the £50k could also be what he thinks he is owed by the business for his time/salary/dividend from the business.

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Forgive me if this has already been posted elsewhere, but can any of the crowdfunders explain the terms on which they paid their money?

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I'm very clear that I "ordered a model"

Here is my order from DJM website. No mention of crowdfunding. 

 

 

Screenshot_20190625-130819_Chrome.jpg

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The problem with all of this, and in some respects our opinions, is that DJM's publicly disclosed accounts were never comprehensive and there is, or appears to be, a similar lack of comprehensive coverage in the Statement of Affairs where the financial information is very one-sided in origin.  DJM's invoicing was known to have been in a shambolic state for a long while which makes it difficult to imagine that other parts of the company's financial affairs were any better managed.  And that is before we get to any conclusions - tentative or otherwise - about where money from the crowdfunders was put and what subsequently happened to it - which must be a major concern to a section of RMweb members who not unnaturally want to know what happened to their money or indeed to members of Funding Circle who have seen some(?) of their money vanish.

 

Whether the liquidators are able to gain access to bank accounts and any other records of the way money moved into and out of the company is in my view an important question when it comes to them properly concluding their fiduciary duty in winding up the company.  Or indeed establishing if the company was trading while insolvent (and the Statement of Affairs indicates it was carrying debts well in excess of its liquid assets while at the same time there must be doubt about the unencumbered value of its fixed assets as they are now recorded as zero).

 

We can however only rely on the liquidators (and perhaps HMRC?) to be asking the pertinent questions and seeking wider information.

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