JD Classics, what have they been up to?
Discussion
Burwood said:
If there was a surplus, the administrators leave, hand the operations back to the JD Directors and bid them farewell. It would then be up to a creditor(s) to collect what they are owed, if anything. Once all claims are settled, the shareholders make a decision, carry on or fold. We know they won't carry on. Hence, JD is dead and the shareholders have just lost their investment.
I've never had to deal with a business liquidation/administration, so I'm just going on what I've read: I thought the administrator (while appointed by the bank) has to secure the best deal for ALL creditors (which would include shareholders), even though the banks gets first dibs. As for the £100million - If JD don't have cash/stock/fixed assets worth very much, where's the bank's money gone? That's an awful lot of coke'n'hookers.
silentbrown said:
Burwood said:
If there was a surplus, the administrators leave, hand the operations back to the JD Directors and bid them farewell. It would then be up to a creditor(s) to collect what they are owed, if anything. Once all claims are settled, the shareholders make a decision, carry on or fold. We know they won't carry on. Hence, JD is dead and the shareholders have just lost their investment.
I've never had to deal with a business liquidation/administration, so I'm just going on what I've read: I thought the administrator (while appointed by the bank) has to secure the best deal for ALL creditors (which would include shareholders), even though the banks gets first dibs. As for the £100million - If JD don't have cash/stock/fixed assets worth very much, where's the bank's money gone? That's an awful lot of coke'n'hookers.
As to where the money has gone. I read that JD made a large loss last year. Maybe the shareholders took dividends. i don't know. I wouldn't say their assets didn't amount to much. They are substantial, just not enough to cover the debts which are greater.
News reports mention financial irregularity-this can mean many things. Maybe someone trousered a few million. maybe someone was ripping off the company-overpaying for stuff and getting a kick back.
Edited by Burwood on Friday 21st September 15:30
Burwood said:
As to where the money has gone. I read that JD made a large loss last year. Maybe the shareholders took dividends. i don't know. I wouldn't say their assets didn't amount to much. They are substantial, just not enough to cover the debts which are greater.
It's pretty odd. This is from the last set of accounts. Assets = £142M, Liabilities (which will include the banks) £77M. It doesn't look like a company that can't pay off it's loans, even if they're largely tied up in stock.
The 'irregularities' that have prompted this catastrophe may well relate to the booked asset value (i.e. the cars). The obvious conclusion could be that some of them had artificially high book values, weren't quite what they claimed to be or, possibly, had dubious or contested title. The bank debt would have been secured on the assets hence the banks taking control pretty swiftly when whatever issues transpired.
Certainly more than Tuke, one would think.
Certainly more than Tuke, one would think.
It's possible the irregularities arose from Hood putting different numbers through the books than he was actually achieving. After all, their cars were always POA, and most buyers won't be too vocal about what they actually paid for their car. Only when Mr Tuke turned up, complaining about what he'd paid for what, that the numbers came to light, and somebody thought "Hang on... That's not what Hood paid for that car, and it's certainly not what he says he charged the customer for it."
Doofus said:
It's possible the irregularities arose from Hood putting different numbers through the books than he was actually achieving. After all, their cars were always POA, and most buyers won't be too vocal about what they actually paid for their car. Only when Mr Tuke turned up, complaining about what he'd paid for what, that the numbers came to light, and somebody thought "Hang on... That's not what Hood paid for that car, and it's certainly not what he says he charged the customer for it."
Many possible scenarios. Perhaps the irregularities were picked up by the auditors. Stock would be a big item to 'audit' as would be Sales. I don't know but my gut feeling, knowing what went on with Tuke. The cars are mostly likely worth no where near the book value. Sales may not be correct, fictitious buyers. We know a large loss occurred after those accounts were prepared, may to april 2018. i'm sure it will all come out in court.To be honest it looks far more simple than that. The company was loaded up with more debt than it could handle, secured against very tippy assets and the whiff of an expensive law suit just meant it was time to for the lenders to salivate what they could. Banks like Lloyds have thousands of clients that aren’t making enough profit to pay off their debt and across many industries the weak are being culled as asset values look pesky and debt costs rise.
DonkeyApple said:
To be honest it looks far more simple than that. The company was loaded up with more debt than it could handle, secured against very tippy assets and the whiff of an expensive law suit just meant it was time to for the lenders to salivate what they could. Banks like Lloyds have thousands of clients that aren’t making enough profit to pay off their debt and across many industries the weak are being culled as asset values look pesky and debt costs rise.
Yep.we all like a wild story but most likely, spot onsilentbrown said:
It's pretty odd. This is from the last set of accounts. Assets = £142M, Liabilities (which will include the banks) £77M. It doesn't look like a company that can't pay off it's loans, even if they're largely tied up in stock.
That looks everything like a company struggling to meet its financial obligations! Assets mean bugger all if you can service your debt - which increased dramatically from the previous FY.
It does look more like a highly leveraged car collection than a business. Like a BTL portfolio that gets large enough to become a lettings agent and a refurb business. And then the lenders suddenly don’t like the book valuation of the collection as the real valuation is not the same.
Wouldn’t the auditors only allow ‘stock’ to be at cost value?
Perhaps there is a case of the stock value being true in that was what was paid for it by multiple dubious trades between directors and other ghost companies.
Only problem then is convincing the auditors (& banks) that your stock is actually worth what you have paid for it, the asking price for that stock will be a lot more than the accounts value probably but as soon as the market looks like dropping or someone takes you to court desputing the price they paid for their car then the pack of cards can collapse!
Perhaps there is a case of the stock value being true in that was what was paid for it by multiple dubious trades between directors and other ghost companies.
Only problem then is convincing the auditors (& banks) that your stock is actually worth what you have paid for it, the asking price for that stock will be a lot more than the accounts value probably but as soon as the market looks like dropping or someone takes you to court desputing the price they paid for their car then the pack of cards can collapse!
beanoir said:
silentbrown said:
It's pretty odd. This is from the last set of accounts. Assets = £142M, Liabilities (which will include the banks) £77M. It doesn't look like a company that can't pay off it's loans, even if they're largely tied up in stock.
That looks everything like a company struggling to meet its financial obligations! Assets mean bugger all if you can service your debt - which increased dramatically from the previous FY.
v8250 said:
Of the declared inventory...how many cars were actually owned by JD Classics, how many owned by Hood and/or how many on SOR?
It *should* be just those owned by JD, at their 'cost' value. Given Hood's rep for having JD "in the middle" of Tuke's transactions, it's entirely possible that the same has happened with JD's stock. Seller contacts Hood with car, Hood buys personally then resells to JD for inflated figure, leading to inflated and unachievable inventory figures.
silentbrown said:
v8250 said:
Of the declared inventory...how many cars were actually owned by JD Classics, how many owned by Hood and/or how many on SOR?
It *should* be just those owned by JD, at their 'cost' value. Given Hood's rep for having JD "in the middle" of Tuke's transactions, it's entirely possible that the same has happened with JD's stock. Seller contacts Hood with car, Hood buys personally then resells to JD for inflated figure, leading to inflated and unachievable inventory figures.
Burwood said:
Actually it should be 'the lower of cost or net realisable value' that is the Accounting Standard. There lies the probable issue.
Would be easy for someone like Hood to spin an auditor* a line about the value in each car...so if there has been any sleight of hand involving Hood's own pockets, then those stock values may be rather questionable.
On the surface (for a non-expert auditor), the gearing in the business isn't THAT high, and it's got £60m of Net Assets underpinning it - not the sort of business that looks high-risk. Unfortunately, as others have said, the market has been shown to be subject to severe swings, so that massive increase in leverage SHOULD have rung alarm bells, long before the court-case came rolling in.
* I used to be one - most of those doing the site-work are pretty fresh out of Uni.
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