Jump to content

pheaton

DJM - Statement of Affairs released

AY Mod

Can you please keep posts on topic. Off-topic content is being removed.

Message added by AY Mod

Recommended Posts

8 minutes ago, Edwardian said:

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

Not sure if there were proper comprehensive t&c's but if ordering an APT the order page states

 

"Important
Please note that so far there has been considerable outlay for this model including research and laser scanning. Therefore the money from this 25% deposit will go towards paying this, and the initial cad/cam design within China. It is the first installment of four that are required to finish and deliver this model, and as such you are therefore asked carefully consider this investment funding before you re-order."

 

This would perhaps explain where the money went and why the pot is empty, the deposits from the APT, King, 92 etc have been spent on the initial research, CADs (and trips to China) etc

 

https://djmodels.co.uk/product/br-class-370-apt-existing-orders

  • Like 1
  • Agree 1
  • Informative/Useful 1

Share this post


Link to post
Share on other sites
12 minutes ago, thedman said:

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

 

It's more likely, I feel, to be the money with which he started the company. He's going to have drawn a salary/taken a dividend - presumably - and taken expenses, but the loan would remain until paid (he pays himself) back.
 

I'm assuming that, like other much larger companies do, it suits his tax situation to have a loan outstanding with the company. It'll be whatever is most tax efficient I expect.

 

At least, that is what I've assumed.

Share this post


Link to post
Share on other sites
16 minutes ago, thedman said:

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.

 

I have asked the liquidators if they have any date on which the loans were made; they haven't at this stage as the statement is the Director's but may be available once investigations are complete.

  • Like 2
  • Informative/Useful 3

Share this post


Link to post
Share on other sites
 
 
1
2 hours ago, chris p bacon said:

DJM were not wholly truthful 

Ha!

You can say that again!!

It seems that those who were "negative" about D.J. from the beginning had good reason to regard every statement he made with suspicion.

  • Like 2
  • Agree 7
  • Friendly/supportive 1

Share this post


Link to post
Share on other sites
1 minute ago, DavidH said:

 

It's more likely, I feel, to be the money with which he started the company.

 

The first micro accounts up to July 2014 don't show anything which would indicate that there was that level of asset value in the business.

  • Agree 4
  • Informative/Useful 1

Share this post


Link to post
Share on other sites

Another e mail from the liquidators.

Hi Colin



It is standard practise to analysis the bank accounts.

I have requested the list. The Director is yet to provide it.

Kind regards Stephanie

 

From the context of the e mails', the "list" is the list of crowdfunders.

  • Like 2
  • Agree 1
  • Informative/Useful 4

Share this post


Link to post
Share on other sites

I doubt we will find out the full facts and where all the money went or indeed how much money there was. It is not really the liquidators job to produce a history of all the transactions. The size of the company would not really have justified or supported any kind of salary and we have no insight into this anywhere. It was obvious for a while that record keeping was an issue.

  • Agree 3

Share this post


Link to post
Share on other sites

can-of-worms.jpg

  • Like 3
  • Agree 1
  • Funny 3

Share this post


Link to post
Share on other sites
49 minutes ago, AY Mod said:

 

The first micro accounts up to July 2014 don't show anything which would indicate that there was that level of asset value in the business.

Dave said this on here in

 

"The OO gauge J94 has all my money ploughed into it from my house (putting my money where my big mouth is) and as such all other projects will be after it until I have a return on my investment. However if orders come through and mount up for the others announced then I will almost certainly approach my friendly bank manager (cap in hand, Oliver style) and ask for more to progress them. Otherwise they will certainly come along and be developed as funds dictate."

  • Like 1
  • Informative/Useful 1
  • Funny 1

Share this post


Link to post
Share on other sites
6 hours ago, pheaton said:

Dont think hattons will agree... Or funding circle, they have lost out, as a Ltd company daves exposure is minimal all he has to do is find a job! 

 

 

 

Hi, my post was in "general". Certainly Hattons and a couple of others were "personally" affected just as the crowdfunders were. BUT its overal impact on the actual model railway market (money gone into these schemes which could have been used elsewhere) is negilable.

Share this post


Link to post
Share on other sites
6 hours ago, Widnes Model Centre said:

 

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

 

When he first appeared, there were a lot of people hesitating between his products and the duplicates via someone else. Back then there was an impact because - for example - Hornby probably found they could not sell their Kings and Class 71s as customers were waiting to compare them with the then prospective superior ones. In recent times, after DJs projects dragged on and on, when someone else annouced a duplicate 92, we saw the reverse happen. So in the last few years, his impact on where people spend money, certainly was not going towards DJ.

 

Now it could be argued that DJ affected the industry be being a pioneer small player affecting the status quo of the big boys, the latter whom supported the model shops (I'm not saying small players don't BTW). But I would argue that was coming anyway.

  • Like 1

Share this post


Link to post
Share on other sites
1 hour ago, Ryde-on-time said:

Not sure if there were proper comprehensive t&c's but if ordering an APT the order page states

 

"Important
Please note that so far there has been considerable outlay for this model including research and laser scanning. Therefore the money from this 25% deposit will go towards paying this, and the initial cad/cam design within China. It is the first installment of four that are required to finish and deliver this model, and as such you are therefore asked carefully consider this investment funding before you re-order."

 

This would perhaps explain where the money went and why the pot is empty, the deposits from the APT, King, 92 etc have been spent on the initial research, CADs (and trips to China) etc

 

https://djmodels.co.uk/product/br-class-370-apt-existing-orders

 

Every time I see the word "investment" mentioned on a pull from the DJM website I wonder If Dave Jones realised that he may have been conducting a regulated activity which may or may not have required authorisation from the Financial Conduct Authority. A managed pre-payment/deposit might not be an issue but calling it an investment might change the legal status entirely.

  • Like 4
  • Agree 3

Share this post


Link to post
Share on other sites
35 minutes ago, Armchair Modeller said:

Dave said this on here in

 

"The OO gauge J94 has all my money ploughed into it from my house (putting my money where my big mouth is) and as such all other projects will be after it until I have a return on my investment. However if orders come through and mount up for the others announced then I will almost certainly approach my friendly bank manager (cap in hand, Oliver style) and ask for more to progress them. Otherwise they will certainly come along and be developed as funds dictate."

However - and odd that it might sound - his micro accounts do not bear that out.  So were the accounts wrong?   Surely they can't have been, even if they were unaudited?

  • Like 2
  • Agree 3

Share this post


Link to post
Share on other sites
Posted (edited)
2 minutes ago, The Stationmaster said:

However - and odd that it might sound - his micro accounts do not bear that out.  So were the accounts wrong?   Surely they can't have been, even if they were unaudited?

If, as has been alluded to above, DJ was doing his own accounts then, given his record-keeping, it is quite possible that his accounts are as fictional as the average party manifesto.

Edited by truffy
demangling
  • Like 2
  • Agree 1
  • Funny 2

Share this post


Link to post
Share on other sites

He definitely claimed to have an accountant at one point - the whole saga with his late accounts last year made mention of them.

  • Agree 3
  • Informative/Useful 1

Share this post


Link to post
Share on other sites
Posted (edited)

You only had to look at last years accounts to see a hole...

 

fixed assets £65k

(CA) Current assets £79k

—-

Creditors 1 year £65k

This mean CA-Creditors £14k...left

And..

creditors due +1 yr £22k

 

Now Takeaway the tooling fixed assets to £0 your way in the red...

 

I was expecting that Julius cesar  announcement moment in May to be the announcement that the old toolings had been sold and were about to appear under a different brand.

 

What I don't see is enough money to fund anything like an APTs development... a tooling train at least 5 toolings and a power car.. £600k say ?, in part installments of £250 sold at £1000 to 1000 people (£1mn project)... then one would expect something like £250k in cash floating about from the first stage...

 

i’m left wondering if it was all a bit of a dream and pre-orders weren't anything like 1000, though I recall this number being suggested in here somewhere at the time, which sounded plausible.

 

Edited by adb968008
  • Like 2
  • Agree 1

Share this post


Link to post
Share on other sites
1 hour ago, Colin_McLeod said:

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

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

 

 

https://www.rmweb.co.uk/community/uploads/monthly_2019_06/Screenshot_20190625-130819_Chrome.jpg.9af9f4bdaf88f54a49f0bdc3ab54360d.jpg

 

1 hour ago, The Stationmaster said:

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.

 

1 hour ago, Ryde-on-time said:

Not sure if there were proper comprehensive t&c's but if ordering an APT the order page states

 

"Important
Please note that so far there has been considerable outlay for this model including research and laser scanning. Therefore the money from this 25% deposit will go towards paying this, and the initial cad/cam design within China. It is the first installment of four that are required to finish and deliver this model, and as such you are therefore asked carefully consider this investment funding before you re-order."

 

This would perhaps explain where the money went and why the pot is empty, the deposits from the APT, King, 92 etc have been spent on the initial research, CADs (and trips to China) etc

 

https://djmodels.co.uk/product/br-class-370-apt-existing-orders

 

Crowdfunders

 

I am struggling to make sense of this - the information is incomplete.

 

"Deposit" and "investment" mean different and inconsistent things, suggesting that DJM was not clear in its own understanding.  Taking what Colin and Ryde have posted in its totality, it seems to me that these were installment payments against the delivery of a model, installments that would be applied to fund production.

 

On that basis, I would suggest that the crowdfunders are creditors; failure to deliver the model entitles them to a refund.  As unsecured creditors, it seems they are unlikely to get one.

 

Director's Loan

 

I don't think the micro-accounts show how and why this arose.  We cannot distinguish Mr Jones from other creditors, though as the first year's accounts showed debts of only circa £9K, Mr Jones' loans to the company were gradual and/or later in the day.

 

Thedman made an interesting suggestion, that the crowdfunders paid Mr Jones personally.  I do not know if there is evidence of this.  If money was paid e.g. to a private paypal account (i.e. one linked to a personal bank account) that may not be definitive.  This might have been administrative convenience, with the money then paid over to the company.  Presumably the crowdfunders would accept that their contract was with the company, not with Mr Jones.

 

If, and only if, Mr Jones kept the money and funded the development using a director's loan is there a difference.  I stress that there is absolutely no evidence of this so far as I am aware.  I pick up on the point because, if crowdfunders did pay the money to a personal account, the possibility raised by Thedman might be worth investigating. In this situation there could be a claim lying against Mr Jones personally, not for failing to deliver the model, but for taking their money. This would be significant because the debts owed to the crowdfunders would effectively survive the liquidation of the company.

 

There are clearly quite a few ifs and buts, and I have no sense of whether there would prove to be any case here, however, at the risk of pouring cold water on the idea, if the Liquidator is looking at a 'list' [of crowdfundwers] based on what the company bank accounts show, then, to be frank, this suggests that the crowdfunders paid into the company.  In which case I would say that they are creditors but unlikely to receive a dividend. 

   

  • Like 4
  • Informative/Useful 1

Share this post


Link to post
Share on other sites

Sorry, but I have to ask about "micro accounts", which didn't exist when I was running my own businesses.  Does a business such as DJM not have to produce a proper profit and loss account each year then?

Share this post


Link to post
Share on other sites
4 minutes ago, spikey said:

Does a business such as DJM not have to produce a proper profit and loss account each year then?

 

The Small Companies Regs of 2013 did away with the P&L requirement to ease the administrative burden on small businesses.

  • Thanks 1
  • Informative/Useful 2

Share this post


Link to post
Share on other sites
5 minutes ago, spikey said:

Sorry, but I have to ask about "micro accounts", which didn't exist when I was running my own businesses.  Does a business such as DJM not have to produce a proper profit and loss account each year then?

 

Section 384A of the Companies Act 2006 .

 

A summary is given Here

 

Micro-entity accounts

 

There are 3 size classifications of company to consider when preparing your accounts; small, medium or large. Within the small company classification there is a sub-set called a micro-entity, which is applicable to very small companies. There are thresholds for turnover, balance sheet total (meaning the total of the fixed and current assets) and the average number of employees, which determine whether your company is a micro-entity, small or medium-sized.

Any companies that do not meet the criteria for micro-entities, small or medium are large companies and will have to prepare and submit full accounts.

 

Micro-entities can prepare and file a balance sheet with a reduced set of information than that required by a small, medium or large company. Additionally, a micro-entity will be able to benefit from the exemptions available to small companies such as exemption from audit and the requirement to file a directors’ report or profit & loss account at Companies House. Micro-entities still need to send accounts to their members as well as filing them at Companies House.

If you think your company qualifies as a micro-entity, you may wish to consult a professional accountant before you prepare micro-entity accounts.

 

Conditions to qualify as a micro-entity

 

A micro-entity must meet at least two of the following conditions:

-turnover must be not more than £632,000

-the balance sheet total must be not more than £316,000

-the average number of employees must be not more than 10

  • Informative/Useful 7

Share this post


Link to post
Share on other sites
Posted (edited)
8 minutes ago, spikey said:

Sorry, but I have to ask about "micro accounts", which didn't exist when I was running my own businesses.  Does a business such as DJM not have to produce a proper profit and loss account each year then?

No - a profit and loss account was not required to be submitted to Companies House (although I would hope the business had one for internal purposes).

 

You will find here details of all the documents the company has ever submitted to Companoies House and whuch are therefore the only information in the public domain -

 

https://beta.companieshouse.gov.uk/company/08601496/filing-history

Edited by The Stationmaster
  • Informative/Useful 2

Share this post


Link to post
Share on other sites
1 hour ago, Colin_McLeod said:

Another e mail from the liquidators.

 

 

 

From the context of the e mails', the "list" is the list of crowdfunders.

 

I'm relieved as this suggests the liquidators are on the case.  Ref Redgates Models query earlier , why would they bother , well they have a legal duty to do it properly .

 

I think Edwardian is questioning the Crowdfunder T&Cs and whether this was an investment (Capital) or Creditor .  As I said before I am not into crowdfunding but it is basic double entry book keeping to record the asset (cash) and the liability (the need to supply a model up to value given) no matter whether its Capital or Creditor, so there should be a long list of modelers who have paid deposits and who expected a train, whether they are Investors or creditors .

 

If there has been confusion over what account this was paid into ie a personal account as opposed to the business account then that certainly needs investigation. What entity raised the Invoice DJM Ltd or DJ the person ? Who were you contracting with and where did the money go . Important to establish this because its DJM Ltd that's in liquidation, you may still be able to claim DJ himself.

 

Really its all a bit of a mess

 

 

 

  • Like 3
  • Agree 1

Share this post


Link to post
Share on other sites
47 minutes ago, The Stationmaster said:

No - a profit and loss account was not required to be submitted to Companies House (although I would hope the business had one for internal purposes).

 

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

  • Agree 3

Share this post


Link to post
Share on other sites

Hi everyone,

 

This statement makes for interesting reading, more so for the facts it doesn’t seem to reflect what we were all expecting. Yes no money was obvious.

 

I was surprised to see a loan from funding circle, clearly suggesting he was getting into difficulty as projects should have been fully crowdfunded with profits going in to fund his core range - as Dave originally implied a long time ago on here.

 

Shame to see Hattons facing a loss of £20k. 

 

The real revelation of Dave being owed £50k was a major surprise as his accounts don’t seem to reflect this. With all his noise about not having a business account/getting this set up and the issue of taking payments and his PayPal being blocked etc seems to point that a lot of money was paid into personal accounts/ personal PayPal. We really need to know where this money actually went or indeed still is as it doesn’t seem to be accounted for or disclosed as it should be. 

 

Even now now at this stage with Dave claiming he is owed £50k does not seem to be the full facts and needs investigated.

 

Mark

  • Agree 2

Share this post


Link to post
Share on other sites
7 hours ago, pheaton said:

Dont think hattons will agree... Or funding circle, they have lost out, as a Ltd company daves exposure is minimal all he has to do is find a job! 

 

 

 

And remember, Funding Circle is a P2P lender so in reality this loss will be individuals and potentially the tax payer.

 

Paddy

  • Agree 2

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.