FOOTBALL SPORTS AUCTIONS -- ACCOUNTS - PLEASE READ !!

[overlap]

Hi, have posted this separately as don't want it clogging up the main FSA thread, but was looking at the last set of accounts FSA filed (in October 2015) covering the year up until December 2014.
Please bear with me, as there may be a couple of items of interest

Now of course, this time, December 2014, is the period just before the initial issues of people waiting for payments in the early months of 2015 started bubbling under.
And which first arose on this board in spring 2015.

I want to look at the section "Current Assets", as they stood in Dec 2014, which hopefully will be pictured below. So, two major things leapt out at me.



1) In December 2014, to my layman's eye, it seems that there are potential issues brewing for FSA.
Mainly, the firm only had £14,882 cash in the bank, but it owed creditors £24,650.

These are the two sums circled. Yes he had £15k in stock (ie programme) assets, but he was becoming "illiquid" --- ie he did not have enough "liquidity", ie CASH.

So, going into 2015 the firm has a £10k cash gap.

Was most of 2015, and the auctions held during that year a scramble to make up this amount?
While at the same time also hoping to convert some of the £15k in programme stock into cash to also try and make up the gap?

2) The second thing, is that for the first time in FSA's accounts (which go back to 2010), there is a whopping sum owed to the firm by a debtor, namely of £15,367 (asterisked).
Obviously if this person (or persons) coughed up then it would more than cover the £10k cash issue.
I wonder how this situation arose and who the debtor was?
A big buyer at auction who then refused to pay, or died, or became seriously ill? Or something else?
The thing is, it obviously blows a big hole in the finances, as it can only be considered an acountancy "paper asset" until it is (if it is?) paid up.
If it is never paid then it never becomes a tangible asset.
So, this was obviously another issue hanging over things.

I know some of the posters on here, deal with finances in their jobs, so any observations welcome.

[DENBIGH]

I'm not sure I know enough to fully comment, but I would say the following:

As others have mentioned, items consigned to FSA Limited do not become the property of FSA, so any stock recorded should not include any client's property. I don't really understand why an auction company would have stock really as it doesn't seem to be very good practice.

The Debtors amount could be a number of things, it is possible that the company has sent out items to buyers before receiving payment (never a good idea). If that is the case I would have thought that the amount shown as a Debtor in the company accounts should only be FSA's propotion of the amount due i.e. their commission.

[WHU2711]

I would agree that it is odd to see Stock for this type of business.

However having Debtors to me is natural, if a programme sells say for £1,000 and let's say 10% commission to seller and buyer.

You would have a Debtor of £1,100 the buyer who has to pay for the programme plus comm, and a creditor of £900 programme sale less comm.

Once the Debtor has paid you would pay the creditor, the £200 being kept as the comm.

I think that is right... this is turning into a basic accounting thread

[DENBIGH]

Quote:

However having Debtors to me is natural, if a programme sells say for £1,000 and let's say 10% commission to seller and buyer. You would have a Debtor of £1,100 the buyer who has to pay for the programme plus comm, and a creditor of £900 programme sale less comm. Once the Debtor has paid you would pay the creditor, the £200 being kept as the comm. I think that is right... this is turning into a basic accounting thread

I don't disagree with you but as Overlap said a Debtor amount appeared in the 2014 accounts for the first time.

Unfortunately the Companies House link does not work for me. There is a note in the accounts (3) which should explain what the Debtor amount is

[mustard68]

The link didn't work for me either but there is an easier way.

if you google companies house [or go there direct]
click on "find company info"
then "start now"
type in the company name
brief details of the company will appear, click on that
you will then see the entire filing history which can be downloaded as required

[Wullie]

As i keep saying the only realistic outcome is wrongful trading.

Did he file annual reports ? Did he take an excessive salary when the company couldn't afford it ? Taking Items of memorabilia from people when there was no "reasonable prospect" of paying the creditor on time/ at all ? Willfully piled up debt ? Kept trading when there was no hope ?

Obviously the professionals will look into all this and more than likely let him off the hook.

My slim hope is finding out when an item was paid for. If the liquidators can prove an item as paid on time (within 120 days ) then i have got a solicitor for free standing in the wings.

At the end of the day we can all speculate , but if we have no proof of fraud , then the likely outcome is they'll accept his version that he continued in the hope he could turn thinks round. They'll kiss his butt. Thank him for his custom and say don't do it again.

[overlap]

Sorry the link doesn't work, I will remove it to avoid confusion.

I suppose the point I was making that it was mighty strange to see this DEBTOR figure appear in the accounts for the first time in five years.

Just before everything started going t*ts up.

Why was he suddenly owed so much money, when no debt sums had EVER appeared as assets before? That is the unusual thing.
Did he change his modus operandi?
And of course it helps boost the paper assets figure in the accounts.
BTW I am not accusing him of fraud, but pointing out at the turn of 2014/15 there seem to be some interesting possible warning signs in the accounts.

[Ann Orack]

https://beta.companieshouse.gov.uk

type the company name and you get a filing history with access to the accounts

[Wullie]

A guy owes him 15 grand ? Convenient. What happened to the programmes/items ? Put in another auction ? Returned to the owners ? Who was this guy ? And was he allowed to bid in later auctions ? Surely not.
Someone ring the liquidators and wake them up

[Wullie]

And one more thing. These figures are small only one year ago compared to the debt I was hearing about. So how can it grow to an astonishingly large debt within one year ? Maybe I'm missing something but all seems very odd.

[Ann Orack]

You’re quite right to question who the debtor(s) was/were. Since there was an auction on the 1 December 2014 it is quite possible they were legitimate amounts due from successful bidders that remained unpaid and that were subsequently received in the early part of 2015.

An obvious alternative could be that it was an overdrawn directors loan account and this was an amount due by Mr Lane to the company. This is less likely since it could have been drawn as a dividend since there were sufficient distributable reserves for this to be legal.

Or it may have been a combination of both. I would suggest no accounts have been completed subsequent to December 2014 so the 2015 numbers will never be known.

It’s a question the liquidator could ask buts it likely he may not get the correct answer. I doubt he’d have the funds/time/inclination to do any digging

Having sold a good collection with another auction house in the last 12 months I feel for you guys. Hopefully there’s enough of you now to get some sort of class action together and part of this is to bombard the liquidator for information and answers.

Does anyone have a copy of the Statement of Affairs?

[Tynie Topics]

Ann Orack wrote:

It’s a question the liquidator could ask buts it likely he may not get the correct answer. I doubt he’d have the funds/time/inclination to do any digging

The liquidators don't strike me as the type who will burrow into the depths of this case to find answers for the creditors.

They are the equivalent of those ambulance chasing companies, "where there's blame there's a claim", in for a quick buck, maybe that is why they were chosen?

That said, I'd advise every creditor to keep on their case and ensure they follow up any concern thoroughly. They are supposed to act in the best interests of the creditors.
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[kcs]

I apologise in advance if I am confusing this outfit for a genuine and honest auction company....

But was it FSA that would either put the lots in the sale on your behalf and you pay commission or they would make an offer on your collection and pay that lump sum regardless of what it fetched in auction.

That could explain assets etc
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[ntw]

In the interests of those concerned, I'll add my views here. I do so impartially, not being affected by the events concerned, and independently, based purely on what I see here (trying to ignore all 'facts' and speculation posted elsewhere).

A quick caveat: I'm a qualified accountant, and experienced in preparation of statutory accounts. However, not on very small companies, and not in the past few years, so the finer details both in respect of small companies, and new disclosure rules relating to recently changed accounting standards are not my area of expertise. However, I would say (hopefully without appearing arrogant!) that this can be considered a professional view.

At first glance, I don't see anything to be alarmed about here. The company has net current assets, and moreover, even ignoring stock balances, can cover its short term liabilities with cash & debtors: this is totally normal. Clearly this relies on the debtor paying up before the creditors are due, but if this were not expected to be the case, then it would affect the 'going concern' status of the company, which would have to be disclosed in the accounts.

If the debtor balance was due from Mr Lane, it would have to be disclosed as such (assuming he is a Director), as a related party transaction; likewise if it were due to another company he owned, or a relative of his, etc.

A question I have, that may be answered in the accounts, is whether in respect of auction sales, they are deemed to act as principal or agent (it depends on who bears the risk of items not selling, amongst other things): I would expect they act as agent. In this case, they would not buy stock off someone selling an item, to then sell on for their own benefit. Instead, they would make a sale, collect the money, pass on the share to the seller, and keep their commission (which would be the revenue you see in the accounts). This would be consistent with showing a balance of money owing (a debtor), with a corresponding creditor (for the amount due to the sellers). I would be surprised if there had never been a debtor balance before though: did they change the way they worked, such as using saleroom.com, and them having a couple of months to send funds through? I would expect to see a small balance for debtors otherwise, given how auctions/collectors typically work.

The existence of stock suggests that they are holding a quantity of their own programmes (or something else if their trade is more diverse) of which they do bear the risk, and will ultimately get the reward, if they can sell. In financial terms, if programmes, I would consider this quite illiquid.

I don't see anything too alarming in these numbers then. 2015's might make more interesting reading, but these will probably never see the light of day. If I get chance to have a look through the rest of the accounts, I will do later, or if someone can post images, I can comment further.

[daiward]

I have only recently discovered this Forum so have been completely oblivious to the extent of the problems with FSA.

Please add me to your list of creditors. I have tried unsuccessfully to gain a response from AR by email. I am loathe to call them as I want a written record of the contact.

I am owed over £600 from the December 2015 auction. This includes items that were unsold at the September auction but were listed with reserves that I had not agreed. I previously had submitted written amounts of each reserve & although the items were sold under the reserve, after I complained I subsequently received a statement from FSA with adjustments to the prices gained up to the original reserves. (Very strange). By this time I was beginning to seriously smell a rat especially as the cheque was being withheld, Andy Lane saying he was awaiting payment from certain buyers.

I feel totally suckered by this gent & like the others similarly affected I will continue to seek reimbursement from Mr Lane & hope he does not find a minutes peace until he has satisfied his obligations to us all.

[Tynie Topics]

daiward wrote:

Please add me to your list of creditors. I have tried unsuccessfully to gain a response from AR by email. I am loathe to call them as I want a written record of the contact.

I think you are going to have to call them to at least notify them that you consider yourself a creditor (they may already know this if the company kept records, as they should) and maintain title over any unsold items. You can then follow this up in writing.
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[Wullie]

Another member. Welcome to the club. I'm not surprised he matched the value you requested as a reserve. As he had no intention of paying you either so it didn't really matter. Just took the heat of himself for a while.