DJ Models: company wound-up and liquidation closed

[truffy]

45 minutes ago, SHMD said:

Everyone here is free to, (has an obligation, right, duty to), bring to the attention of the Moderators any rude, offensive and/or libelous material.

In those instances, it would be more appropriate to use the post reporting tool to bring such concerns directly to the attention of the moderators, rather than a general broadcast along the lines of 'this is very silly and I don't like it, so stop it!'

[DY444]

On 07/07/2020 at 10:51, phil gollin said:

.

 

Moderators, 

 

 

For God's sake, can't we just close this thread  -  it is pointless.

 

All it does is continue insults and questionable "jokes".

 

.

 

If you let me have your address I'll arrange for the police to come round and deal with the person forcing you to read it.

[SHMD]

Where would RMweb be without "questionable jokes"?

 

 

Kev.

 

[BoD]

5 hours ago, SHMD said:

 

Where would RMweb be without "questionable jokes"?

 

On a much smaller server?

[roythebus]

I've not been following this thread too closely as I have no interest in DJM, but would make some comments that may not have ben made. 

 

Liquidators fees may seem high to us mere mortals but I believe they are fixed by law. That is not the wage of one person, but would also include the overheads of running the business, overheads which any business would incur.

 

I note there's a directors Loan account of some £50,000. That is probably DJ's own money which he put into the business to keep it going, maybe a second mortgage on his house, I don't know, I'm not over-interested.

 

That there only 10p left in the account is of little importance. Once the liquidators take over, that is outside the control of the former director. At that time there "may" have been many £1,000s in the account and that was legally used by the liquidators to cover their expenses. The fact that there was 10p is down to the liquidators. I know a bit about how these things work as I was MD of a company that went into liquidation in 2003. It was not pleasant but educational in a number of ways.

[chris p bacon]

2 minutes ago, roythebus said:

That there only 10p left in the account is of little importance. Once the liquidators take over, that is outside the control of the former director. At that time there "may" have been many £1,000s in the account and that was legally used by the liquidators to cover their expenses. The fact that there was 10p is down to the liquidators.

 

Without going over old ground, the reason there was just 10p in the account is because that is all there was when DJM was pushed into filing for liquidation. If you read into the documents he wasn't forthcoming with financial and other information, He did deposit a sum of a couple of thousand  pounds towards the fees duing the process.

It certainly looks the case that at no time did he hand over all the information about what deposits he had taken and many were through his personal Paypal account, and cases are still coming to light of customers who are seeking redress for monies lost.

I doubt this liquidation is like the one you went through.

[roythebus]

Yes I remember reading those points a couple of months ago when I last looked at this thread. somebody has to pay the deposit for the liquidators or they don't start and forced bankruptcy can be nasty. company liquidation is a lot easier legally!

 

He should have handed over what information he had as I did when my company went broke. Those customers who are still trying to get their money back may as well give up unless they are claiming from a credit card or bank. The company no longer exists. I doubt they'll even get a reply from the liquidator.

 

My company was a bit different as it had a turnover in excess of £2m. Whilst it went into liquidation in december 2003 it wasn't finally closed down until about 2 years ago! I suspect it laid dormanyt on the liquidator's files until they could be bothered to shut it completely.

 

[chris p bacon]

45 minutes ago, roythebus said:

He should have handed over what information he had as I did when my company went broke.

There is a diference between a company that goes wrong over time and ends up in liquidation, and one that shouldn't have been trading with someone at the helm who is a bit fast and loose with other peoples finances.

[truffy]

On 02/08/2020 at 14:44, chris p bacon said:

There is a diference between a company that goes wrong over time and ends up in liquidation, and one that shouldn't have been trading with someone at the helm who is a bit fast and loose with other peoples finances.

Yep, it's my guess that Roy and Dave (that's dodgy Dave, not crispy Dave) are very different types of businessmen.

[Colin_McLeod]

From Companies House website.

 

 

Report:

application-pdf (4).pdf

Edited August 13, 2020 by Colin_McLeod

[Enterprisingwestern]

 

How does the liquidator get his fees when there isn't enough money in the company to pay them, is it government subsidised?

 

Mike.

[-missy-]

Hi.

 

Please someone correct me if I am wrong but there is around £250k of funds missing? £175k from 41 creditors plus deposits from 178 people?

 

M.

[grahame]

I guess he spent most of that in running the 'business': he did employ someone to design and build a website; a contractor to produce the various CADs; there was also some advertising; the production and shipping costs of the Mermaids and OO locos; and I believe air-fares for several trips to China; as well as his business withdrawals . . .  

 

Unfortunately there was little to show for all that expenditure, and no assets to liquidate (according to the liquidator).

 

 

[Colin_McLeod]

34 minutes ago, -missy- said:

Hi.

 

Please someone correct me if I am wrong but there is around £250k of funds missing? £175k from 41 creditors plus deposits from 178 people?

 

M.

 

Agreed

 

The published accounts do not reflect c £250k of deposits with a corresponding level of creditors. 

 

I would imagine that the Director could explain, but so far I have not seen any explanation.

 

[Colin_McLeod]

14 minutes ago, grahame said:

I guess he spent most of that in running the 'business': he did employ someone to design and build a website; a contractor to produce the various CADs; there was also some advertising; the production and shipping costs of the Mermaids and OO locos; and I believe air-fares for several trips to China; as well as his business withdrawals . . . 

 

 

 

I agree, but such expenditure should show up in tbe accounts, but I can't find it.

 

[-missy-]

30 minutes ago, Colin_McLeod said:

 

Agreed

 

The published accounts do not reflect c £250k of deposits with a corresponding level of creditors. 

 

I would imagine that the Director could explain, but so far I have not seen any explanation.

 

 

So the figure could be more like £400k?

[chris p bacon]

46 minutes ago, grahame said:

I guess he spent most of that in running the 'business': he did employ someone to design and build a website; a contractor to produce the various CADs; there was also some advertising; the production and shipping costs of the Mermaids and OO locos; and I believe air-fares for several trips to China; as well as his business withdrawals . . .  

 

Unfortunately there was little to show for all that expenditure, and no assets to liquidate (according to the liquidator).

 

 

 

CADS were produced by, and remained in ownership of the factories. Hence why some Ex DJM product is now appearing under a different name as the factories try and recoup their loss.

 

You forgot the trips to India and the Galapagos Islands......for research....

[grahame]

11 minutes ago, chris p bacon said:

 

CADS were produced by, and remained in ownership of the factories. Hence why some Ex DJM product is now appearing under a different name as the factories try and recoup their loss.

 

 

All of them? I was under the impression that the liquidator managed to get a few measly bob for the sale of some CADS.

 

The tooling was certainly not paid for by DJM and remained owned by the factories. That is how some of those DJM projects are now appearing.

 

The research trip to India was to be able to announce a nice Indian tea steamer loco project. 

 

 

[The Stationmaster]

33 minutes ago, grahame said:

I guess he spent most of that in running the 'business': he did employ someone to design and build a website; a contractor to produce the various CADs; there was also some advertising; the production and shipping costs of the Mermaids and OO locos; and I believe air-fares for several trips to China; as well as his business withdrawals . . .  

 

Unfortunately there was little to show for all that expenditure, and no assets to liquidate (according to the liquidator).

 

 

Now let's sort a few things.  Most - if not all - of the models he was seeking deposits for in the final year or two of the company were reportedly (from a reliable source) on back end loaded arrangements with the factory.  The factory did everything from CAD onwards but no charges were to be raised against DJM until tooling commenced - and as far as we know no tooling ever happened.   I don't know if this also included the APT where there was clearly a scanning and scan processing charge but what happened beyond that is unclear.

 

The original factory working on various DJM projects ceased work on all of the DJM own account projects because it claimed DJM owed them a serious amount of money.  That factory had title to the tooling,  and - as far as i know - to certain CADs as well.  All contract work from commissioners had dried up either because projects were taken in house or the commissioner withdrew before spending any serious money (or never progressed to the stage where they paid any money to DJM).   Thus DJM's sole income was from sale of any stock on hand, the £50,000 loan, and any money paid as deposits/stage payments by customers.

 

Only the £50,000 from Lending Circle showed up in the accounts apart from sales of stock (which is only indirectly shown in any case).  The money paid as deposits and other debts, where £250.000 is probably a not unreasonable estimate from the known figure from 41 creditors - but we don't know how the 41 is made up or the 178, or anybody who hasn't bothered to claim or gave up.  The £53,000 is the only other figure we have.   But if the number of people allegedly required to actually get each model project sufficiently financed was actually achieved then logically there would a be a lot more money owed to unsecured creditors.  Is it really correct that potentially only c.220 people had taken up at least three projects the cheapest of which would have consumed  at least c.£150,000 in development and production costs - that equates to c.£680 per customer for their model and they can't all have been APT deposits/stage payments.

 

So the conclusions - based on the numbers we do know are -

1.  There were a lot more customers paying deposits than the c.220 if all the projects had received sufficient customers to justify the cost of starting the project; we don't know how many or how much

2.  We can readily estimate (and it is only an estimate) from the c.220 number we do have that the amount paid in deposits or stage payments was in reality probably c.£250,000 (but it could potentially have been much more or even much less).

3. If we add that figure to the stated £53,000 we top £300,000. and again this is, I repeat, only a 'back of the envelope estimate'.

4.  What seems wrong is the presumed number of customers involved in paying deposits/stage payments for the projects, surely many more were needed to provide the correct financial base for each project?  For example if you allow, say, an end customer price of £150 for a model and the development costs are £150,000 you need 1,000 customers to break even and you're either a fool or a charlatan if you start a project running with fewer than sufficient customers to cover the total cost. 

5.  However you also need to factor in what I would describe as the 'commission fee'.   DJM might have personally incurred some cost but he apparently had no other personal income so presumably he needed to charge, not unreasonably in my view,  a fee for doing the work he did do.  We don't know how much that was as it didn't appear in the accounts but might it possibly have been on a par with what he had previously charged commissioner clients?  I don't know but he must surely have taken some sort of fee, unless he was living on fresh air.

 

In summary we don't really know how much money was 'consumed' by the company but it was at least just short of £230,000 from the figures quoted in the final report of the liquidators and that money passed through the company in a space of, probably, a bit less than two calendar years with nothing in the way of tooling to show for it and the only realisable asset being a couple of IP registrations.  Plus of course a few adverts in magazines etc and the cost of running the website, paying for some IP registrations, and one scanning event plus some limited research -  and I can't see all that consuming that amount of money.

[grahame]

18 minutes ago, The Stationmaster said:

Now let's sort a few things.  Most - if not all - of the models he was seeking deposits for in the final year or two of the company were reportedly (from a reliable source) on back end loaded arrangements with the factory.  The factory did everything from CAD onwards but no charges were to be raised against DJM until tooling commenced - and as far as we know no tooling ever happened.  

 

Not quite true - there certainly was tooling produced for the Mermaid wagon (a batch was actually produced), class 17 loco (an EP was displayed at TINGS and the factory hawked it around to potential companies after the demise of DJM) and possibly the Shark brake van (I seem to recall an early EP for that although the planking gaps were gross). But all that tooling was funded by the Chinese factory and apparently not paid for by DJM. 

 

And, oddly, he did refund initial deposits for the class 17 when people baled after he asked for additional payments and it became obvious that the project was unravelling (possibly the factory pressing for payment for the tooling work).

 

 

[John M Upton]

I always got the impression that Dave thought he owned all the tooling but when he discovered he didn't, that was when this house of cards started to collapse and he began tossing teddies out of his pram.

 

Basically he was incompetent.

[The Stationmaster]

11 minutes ago, grahame said:

 

Not quite true - there certainly was tooling produced for the Mermaid wagon (a batch was actually produced), class 17 loco (an EP was displayed at TINGS and the factory hawked it around to potential companies after the demise of DJM) and possibly the Shark brake van (I seem to recall an early EP for that although the planking gaps were gross). But all that tooling was funded by the Chinese factory and apparently not paid for by DJM. 

 

And, oddly, he did refund initial deposits for the class 17 when people baled after he asked for additional payments and it became obvious that the project was unravelling (possibly the factory pressing for payment for the tooling work).

 

 

It's interesting to look at the timing of the Class 17 refunds    But when was the Mermaid actually tooled - because it, like the Class 17,  was with the original factory and is now appearing under the EFE brand so neither date from the final couple of years of the company.  Not so sure about the Shark though

[AY Mod]

1 minute ago, The Stationmaster said:

It's interesting to look at the timing of the Class 17 refunds

 

Aah; when people thought they were paying for...

 

 

And what they he  got instead was...

 

[MarkSG]

4 hours ago, Enterprisingwestern said:

 

How does the liquidator get his fees when there isn't enough money in the company to pay them, is it government subsidised?

 

No; the possibility of not getting paid in full is one of the trading risks of being an administrator.

 

In practice, it's rare that the administrators don't get paid. If it's a voluntary, rather than compulsory, liquidation, they simply won't take the job without first securing payment. If the company itself can't pay the full amount then usually the directors will be required to do so. That can, of course, mean paying it out of their savings, or taking a loan, or even, in extremis, selling their house. But they will have to stump up somehow (or provide legally-binding guarantees that they will stump up, such as agreeing a charge on their property) before the administrators will start work.

 

If it's a compulsory liquidation, then the risks to the administrators are a bit higher as there's no guarantee they will get paid. But, if the company was trading while insolvent (which is often the case by the time it gets to compulsory liquidation), then they can sue the directors for the money if the company can't pay them out of its own assets. And then we're back to the previous scenario, except in this case the directors still have to pay but this time they've also got a CCJ against their names.

 

The only real risk that the administrators won't get paid, therefore, is either a) when the liquidation is compulsory, but the company wasn't insolvent but it still hasn't got enough money or assets left, or b)  if the directors themselves become personally insolvent. Both of those are pretty rare, and hence they're an acceptable trading risk.

[spamcan61]

10 minutes ago, AY Mod said:

 

 

 

And what they he  got instead was...

 

Is that the Business Class edition perchance?