Saturday, 11 May 2013

Digital Village


On May 10th, White Rabbit Records Limited – the owners of the Digital Village music retail chain – quietly announced that they had gone bankrupt and called in an administrator. But then, as if by magic, a new company, DV247 Ltd, rose like Phoenix from the flames, promoting a flashy new website and claiming to be bigger and better.

Should anyone care about the latest company restructuring to hit the high street?

Well, yes. Because there’s more to this than meets the eye. And there are a lot of losers from this carefully planned, cynically premeditated business sleight of hand. There are scores of loyal hardworking staff, for instance, who turned up to work at eight of the nine Digi Village shops to find the doors locked and the business closed forever. Only one ‘Superstore’ will remain open in Romford. Or should that be ‘Supershowroom’? Because by and large, all sales processed by the new company will now be handled and shipped from Germany rather than the UK. Goodbye jobs and goodbye UK taxes. Or should that be auf wiedersehen, mug.

This prepack administration (whereby a new structure has been carefully prepared behind the scenes so that the company can fold and write off debts but then resurface minutes later under new ownership with a clean balance sheet) leaves plenty of people out of pocket – staff, who must now hope they’ll one day receive some or all of overdue wages, holiday pay and other benefits, the VAT and tax authorities, suppliers and possibly landlords of the now defunct shops facing unrecoverable rent arrears. And of course, DV’s loudly trumpeted ‘four year warranty’ isn’t worth the paper it is printed on (not that it ever was). Indeed, all warranty on goods sold by the company are now invalid. Thirty days sale or return? Forget it. If your gear breaks down, you’re stuffed.

There may well be other losers – time will tell. For example, as a supplier, Funky Junk received and shipped valuable orders just three days before the bankruptcy. I’m sure these were prepaid by DV customers and the proceeds safely banked, but we’re most unlikely to be paid. We’re now in a long queue of suppliers classified as ‘unsecured creditors’, despite the fact that our invoices make clear that we retain ownership of the goods until the invoices are paid.
"...the administrator sells the business before the creditors have an opportunity to say whether or not they approve of the sale transaction. It is this aspect that has brought some pre packaged sales into some disrepute." --Purnells (read more)
By most reasonable definitions, this verges on fraud. The DV directors had been planning this for some time. The new (German) owner had been in place and a new website built for weeks if not months. The directors knew full well that there was no chance of suppliers being paid for orders shipped in the days before administration. They must have known that staff wouldn’t be paid (and no doubt hid the knowledge behind friendly smiles as they passed longstanding employees in the office, the shops or the car park) and must have known perfectly well that the VAT they were collecting on behalf of the government (and paid by their customers and suppliers alike) would never be handed over to the relevant authorities.

These prepack bankruptcies would not be legal anywhere else in Europe. And nor should they.

So how did this state of affairs come to pass, and what are the implications for the future?

For the last few years, Digital Village have pursued a policy of aggressive pricing and discounting, attempting to force down pro audio and instrument prices and drive the competition out of business. It was a crazy policy and had the opposite effect from that intended. At times, DV advertised prices equivalent to or only marginally above their buying prices. And the result? Irrespective of sales volume, the company has been unable to generate enough profit or margin to pay their bills. Hence bankruptcy. Most well run businesses in the same sector saw this coming, and like us have had to grit our teeth and shrug our shoulders when clients asked us to match DV’s prices. No, we can’t price match, we said politely. Not if we want to stay in business, anyway. But of course customers neither know nor care about the business nuances of pricing in a competitive market. Damn it, I even had pressure from within my own company to match DV’s prices on our website, as otherwise we would appear ‘expensive’. And much as I understood the logic and the pressure, I always resisted. To pay good wages to keep the best crew in the business and to continue to give our unique service report, we have to make a modest margin. No one drives a Mercedes at Funky Junk (my wheels are a screwed onto a 1990 BMW 320 which cost me £300 six years ago. I love it though – that’s a different story). I take no pleasure in having been proved right about pricing, but then again, it didn’t need John Maynard Keynes to work out that any company that tries to sell at cost or marginally above is destined for Carey Street.

So what about the future?

The assets of White Rabbit Records Limited (trading as Digital Village) have been purchased by the owner of Thomann-stylee Cologne music supermarket, Music Store, via a brand new company called DV247 Limited in a carefully planned and executed ‘prepack’ administration. As I said earlier, DV have effectively written off all their debts to suppliers, customers, staff, landlords and the taxman, retaining their profile, trading name, website (revamped to provide a new front page for the English version of the German Music Store site), mailing and customer lists and stock – all purchased for a pittance from the receiver for a previously agreed amount (almost certainly well below open market value).  And a careful study of the website makes crystal clear that orders placed with DV will be shipped directly from Germany (taking two to three days to arrive). Want specialist advice? Learn German. Need to return or exchange faulty goods? Allow at least a week for international shipping. Need gear repaired? God knows what you’ll do – the new glitzy website is strangely silent on the matter. And what about warranty support? That certainly isn’t going to happen in the UK. Almost certainly DV will be buying all their gear in Germany. And as official service agents for Royer, Manley, Tube Tech and others, we certainly won’t be authorised to repair equipment supplied directly by a German company, even if ordered via a UK intermediary.

It’s interesting to note that DV’s website prices have risen overnight, by anything up to 30%. Well, they had to of course. But keep an eye on the value of the Euro. We may well see prices flopping around like The Pet Shop Boys in a hurricane as exchange rates wander too and fro.

Lest you wonder, these words don’t reflect professional jealousy. I wouldn’t engage in such sharp business practices even if the roof over my head depended on it. Maybe I’m old fashioned, but I believe in honouring my word, whether that means paying my bills (if not always bang on time), honouring warranties, commitments to staff and customers or being straight with colleagues as to my business plans and strategy.

Overall, this shave-down is very poor practice, verging on fraud. But ultimately, all that really matters to you, the customer, is that you can get good prices and a professional level of service and support.

That remains to be seen. But I, for one, will neither buy from nor sell to this dodgy outfit. You can’t divorce morality and honesty from business (or life, come to that) irrespective of what the lawyers and accountants tell you.

Eccentric (11.05.2013)

UPDATE 14.05.2013:

MIA questions DV247 deal

The MIA has issued a statement following the purchase of Digital Village's business and assets by German-based Music Store.

In the statement, MIA chief executive, Paul McManus, voices his support for the 31 Digital Village employees who have been made redundant due to store closures and announces that the MIA legal team will be reviewing the SIP 16 report that is set to be published shortly by White Rabbit Records administrators Grant Thornton.

The full statement reads as follows:

“This is a bad day for UK MI. There is no pleasure to be taken in the falling of what was our largest UK retailer. There are many, many staff today without a job who have given years of loyal service to the industry and I would encourage any of them to send me their CV’s so that we can act as a resource centre for the industry. We did this with Sound Control and managed to bring affected staff together with employers.

Aside from the tragedy of the staff, there is, naturally, the wider issue of what this means to UK MI. The many millions that DV brought to the UK economy and industry in terms of sales would now appear to have gone offshore.

Our first priority is to ensure that the due diligence applied by Grant Thornton under SIP 16 has been correctly discharged. This Code of Conduct is there to ensure that the sale of the business was achieved in the best interests of both Digital Village AND the creditors.


The MIA legal team looks forward to viewing the SIP 16 report that Grant Thornton will shortly publish, accordingly. There may well be good reasons highlighted in this report, but it is a huge shame that, as far as we are aware, no UK retailers or suppliers were given the opportunity to make a counter bid for the business in order to keep it UK-owned”. 

For more information, contact Paul McManus via e-mail or the MIA office on 01403 800500.
http://www.mi-pro.co.uk/news/read/mia-questions-dv247-deal/017713

UPDATE 18.05.2013 from Music Industries Association:

Urgent MIA update on Digital Village

The MIA recently held a meeting of major creditors of White Rabbit Records Ltd (DV) where a number of issues were raised, as well as some important points of action that may be to the advantage for creditors to consider:
1) The MIA feels that the only practical way to have a reasonable chance of creditors succeeding in recovering what is rightly due to them under their 'retention of title' (ROT) clauses is to join together as a single voice to put the case to the administrator or liquidator.  Recent experience with large retail insolvencies have shown that for creditors to maximise their recoveries in respect of ROT stock, it is essential that they join forces together, paying lawyers/accountants as necessary to achieve the required result. Without this leverage and action taking place without delay, it is likely that creditors will not be as successful in recouping as much of their debt as they are entitled to.  This is because the new business continues to trade and is, in all likelihood, using creditors' stock to bolster their sales.
2) The industry is waiting for the SIP16 report from the administrator to confirm that the pre-pack arrangement was carried out on a valid basis allowing for the best return for creditors and the UK industry in general.  It has been reported that the DV web site had been managed by the purchaser prior to the company going out of business/ceasing to trade. This would seem to be contrary to best practice and possibly illegal.
3) There seems to be confusion regarding the marketing of the pre-pack, as no UK Company appears to have been advised of it.  It will be interesting to see the administrators' reasoning for this lack of marketing as it may be contrary to best practice and ultimately, if proved, there may be a potential to bring claims against various parties because of the concern that the sale may never have been marketed through the appropriate channels and therefore effected at an undervalue.
4) A critical element that can't be overstated is the fact that the facilitators for the liquidated company, iforce group (distribution), are currently holding the bulk of the stock that will be subject to ROT and are themselves a major creditor. As such, they are highly unlikely to allow any access to our industry stock until they have been paid all outstanding debts.  This is immaterial to any promises from the directors of the new or old company and/or the administrators.
5) There remains much confusion and mixed messages amongst the UK's distributors about the structure, purpose and format of DV247 Ltd. Many companies are hesitant about signing any fresh distribution agreements until clarity is established.
6) It is advisable for MIA members to insist that a creditors committee be set up to consider and question the actions of the directors and possibly the administrators as without this there will be little leverage that can be applied to achieve a successful outcome for the UK MI industry.
7) Ultimately, MIA members may conclude that they are unhappy with the actions of the directors and/or the administrators in effecting the pre-pack sale of the business in the manner they have.   Accordingly, subject to the having the support of creditors, which is only really achievable if we stick together, it may be necessary to consider appointing other independent insolvency practitioners to look into the actions of the directors and the administrators so as to confirm that the sale has been at arm's length and carried out to an acceptable standard.
In conclusion, we believe it is essential to resolve the ROT position as soon as possible and creditors are urged to contact the MIA with a view to us co-ordinating matters.  We hope to write to you shortly after receipt of the SIP 16 report but, in the meantime, should you require any further information or explanations, please do not hesitate to contact us.
MIA - Music Industries Association

For those interested, please now see my follow up blog -

http://theeccentricblog.blogspot.co.uk/2013/05/dv-or-not-dvzat-iz-ze-question.html


www.proaudioeurope.com

63 comments:

  1. Absolutely bang on and I for one will boycott DV247 from here on. Funky all the way. Honour and honesty needs to exist for an enjoyable world. Clive

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  2. Agreed, have shared this with the 200,000+ Pro Tools Expert community. Thanks guys.

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  3. Such a shame. I have my Korg MS20 mini coming next week thinking of cancelling and taking my custom elsewhere. I'm a loyal customer of the Romford brand but this isn't right. I hope they have kept all the Romford staff on board great guys up there

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  4. I bought two pairs of headphones from Digital Village just last month and now I feel dirty and ashamed and want to send them back on principle but know that I can't. Poor show.

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  5. Hmm - very intresting, a salutory tale !
    So all their suppliers have to take a loss? Were there no warning signs.
    I seem to remember all the MI credit controllers have a little intelligance sharing network that would flag these things up in advance.
    also Wonder how much xxxxuk lost ??

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  6. I can appreciate this whole situation will cause a mixture of reactions from people who are not directly involved with dv247 (as Digital Village as a brand was changed to over a year ago), ie. those people who are not staff. Personally I'm a little confused by a number of the statements made in this article, especially being an (ex) member of dv247 staff who has recently lost their job.

    For example, statements made about a "new" website are curious, where did you get such information? The site is just the same as it ever was, based on the same platform as it has been for many years - the main difference is a few carousel banners and a couple of side banner areas advertising the warehouse and customer review stats. A few banners does not a new website make. You're making some (sometimes quite strong) statements and yet providing no evidence in your article to back them up - new website, price increases, people being out of pocket etc.

    I'm not interested in causing a flame-war about the whole dv247 situation, I'd just like to think that people would base things around facts rather than speculation - speculation can damage the side it's about as well as the side that makes it, remember. As a business owner yourself, I'd hope that you wouldn't get drawn into the whole "aggressive venting/ranting" trap and try to present your UK business as one that just wants to do it's best for it's customers (and industry) rather than run down it's competition when on its knees. If anything it should be the ex-staff ranting about the dv247 situation but maybe we're too busy trying to find a job to get back some security, pay the bills and feed our families. I just hope that all ex-dv247 staff can find jobs as soon as possible, myself included.

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  7. Posted on behalf of John Da Costa:

    Suffice to say, there are a number of downright lies in this vitriolic rant from a partly anonymous competitor which are nothing short of libellous. The very LAST thing I wanted to do was put the company I started 34 years ago, through administration and become the FORMER owner of DV247 and risk alienating our valued customers and suppliers. Please watch this space for a more comprehensive and detailed response to this vicious attack, which we will be posting very soon.

    John Da Costa

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  8. I completely agree Eccentric
    because this practise is becoming alarmingly common and has just happened to a company i was supplying, its disgusting, but to be frank i had just one god shopping experience with DV and everyone after that was a big pain in the arse, uninformed staff, poor company structure, and a horrid shopping experience , im sorry for the workers and suppliers who DV are going to stiff, but im glad they are gone,

    John i wonder if is libel, if a lot of people believe the same thing?

    STEVE HONEST

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  9. Many thanks for joining the forum, John (or should that be Gavin?).
    I await your balanced response with baited breath.
    In particular, I look forward to your assurances on the following points;
    1. That once you had decided the nature and the date of the prepack administration, you ensured that no goods would be ordered from suppliers in the knowledge that these would not be paid for. Equally, that you did not accept payment from customers for goods supplied to you and which you had no intention of paying for. If you did, please explain how this is not tantamount to theft, or at the very least fraud?
    2. That staff were advised of the problems White Rabbit Records Ltd faced and were given due notice of redundancy min order to seek alternative employment and make arrangements accordingly. Please also confirm that all staff have been paid in full, including holiday pay and other entitlements. Please also confirm that all PAYE deducted from staff members (which reprepsent a portion of their wages) has been paid to HMRC in full..
    3. That all VAT, Rents, Business Rates and Corporation tax owed by White Rabbit Records Ltd up to and including May 10th 2013 have been paid in full.
    4. That as a director of White Rabbit Records Ltd, you ensured that no additional liabilities were accrued by the company following the point at which you entered into provisional agreement to sell the assets of the company in a prepack administration.
    5. That the assets of White Rabbit Records Ltd were sold for the best possible return in order to satisfy creditors, and that no private arrangement was entered into for the sale of these assets by private treaty (know as a 'Prepack' sale), but rather that these were offered on the open market to the highest bidder.

    6. That as a director of DV247 Ltd, you will use your best endeavours to ensure that all liabilities of White Rabbit Records Ltd are paid in full before you draw a salary or bonus from the new company.
    7. That DV247 Ltd will supply the UK market with good purchased legitimately from UK distributors and not goods purchased in Germany.

    I'm sure other contributors will have their own questions.

    Hopefully there's nothing madly virtiolic or vicious in these questions (any more than there was in my initial post).

    DV has a proud tradition and employed great staff, which makes this Prepack scam all the more sordid.

    Mark (semi-anonymous) Thompson

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  10. I see DV247 Limited (the new trading company) was set up on 30.04. 2013.
    http://wck2.companieshouse.gov.uk//compdetails
    Would it therefore be reasonable to assume that by this stage, the Prepack was already planned and a vehicle for the new company was registered accordingly? Or am I merely adding two and two to make four...?
    Mark

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  11. I'm hiding in anonymity as I fall into the employee pool so have to watch which cages I rattle.

    I find it hard to disagree with one word Mark has said, the speed of the fall and rise seems to make it impossible for this not to have been pre-planned.

    I'm guessing a number of DV staff have been here before very recently with Sound Control, my heart goes out to all of them. I'm not working at the moment, and it's mean out there right now.

    Mark has always played a very straight bat with in his business, I do not think for one second he will be looking to pick up custom from this. He is just pointing out a problem we seem to have in this country as a whole at the moment, greed and short term thinking replacing decency and honesty.

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  12. Hi,

    There are a number of factual inaccuracies in the blog post above which we would like to correct for the benefit of our customers.

    4 year warranty.

    The new company will honour 4 year warranty claims for customers who have purchased goods prior to the transfer of the business.

    For the purpose of transparency we would like to announce that we will be changing our warranty offering from the 10th July 2013 to a three year warranty but this change will not affect customers who have purchased under the 4 Year Warranty offer.

    DV247.com website.

    DV247.com is the same website that was operating prior to the change with the functionality and now enhanced product range that our customers know and love, it has some additional messaging but remains unchanged.

    Warranty repairs.

    Warranty repairs will be carried out by manufacturers or manufacturer authorised UK repair centres for goods purchased before the transfer of the business.

    Pricing.

    Unfortunately our automated pricing routine has created a few isolated price rises that are unintentional, we are working to fix these issues now. As always if you find a cheaper price please call us for a price match or use our lowest price guarantee and purchase the item, we’ll happily refund the difference.

    DV247 Ltd.

    DV247 limited is a UK registered company which will pay VAT and corporation tax as well as salaries to the staff at Romford HQ who have retained their jobs – if you need expert advice there’s no need to learn German as our team of UK based experts are here to help although if you speak German, French or Spanish we have staff who are fluent in these languages.

    Best regards

    Gavin James

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    1. My points relate to White Rabbit Records Limited and not the new company, DV247 Ltd.
      In essence you have confirmed the accuracy, rather than the innacuracy of my post.
      Thanks
      Mark

      Delete
  13. Posted on behalf of John Da Costa:

    Mark, I have no intention of being subjected to trial by forum, so this will be my last response.

    We took advice all the way through the sale process to ensure that we carried out our directorial duties correctly. Also I can state quite categorically that there were no side deals and this was the best deal we could get, the company having been marketed extensively by Grant Thornton and monitored very closely by the bank leading up to the sale.

    John Da Costa

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    1. Oh, you took advice from a firm of slick accountants. That's OK then - you were only 'obeying orders'.
      Ultimately there is no moral justification for a prepack. That it's (barely) legal if you can afford the lawyers doesn't make it right.
      But we'll see in the coming weeks and months not merely what the implications are to your suppliers andd former staff, but generally how this German Trojan Horse in Romford reshapes and redefines the UK pro audio industry.
      As Secret Footballer so rightly says, this should not in any way become a forum for mud sligning about DV. I always felt the staff and management were honest and hard working (if misguided in trying to position themselves as a major international discounter), which makes the current bankrupcy all the more sad.
      Companies hit problems. We've seen it often over the years in this and other industries and we'll see it frequently in the future. The reasons aren't just the state of the economy, but have particular implications in our business - changing technology, international competition, declining record sales and more. So all those who've suffered what must have been a very stressful and difficult time at DV have my sympathy. But none of this is any excuse for the appalling behaviour of the directors in cynically restructuring a prepack deal in secret whilst continuing to take orders from customers, take credit from suppliers and collect VAT and PAYE on behalf of the government, knowing full well that this was unlikely to be paid over. And if Grant Thornton advised on these machinations, then shame on them and shame on the statutes that make this legal in the UK (despite being highly illegal in most other civilised countries).

      Oh, and thanks for pleeding the Fifth Audio Amendment to what I would have thought are a few perfectly simple and reasonable questions. As one concerned with transparency, I can't see what possible reason you might have for avoiding answers. Or should we merely draw our own conclusions?
      Mark

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    2. John
      You a man of a lot of years trading and managerial experience, so I can't for one minute think you are naive enough to simply have taken advice from a firm of insolvency practitioners at face value and not appreciate the implications it would have to those outside of your business.

      Having been in the centre of a company having to deal with administration it is clear that these practitioners, although working to the letter of the law, lack the moral or ethical values that extend beyond expedient disposal of liabilities and them getting paid. Everything and everyone outside of that realm can go to hell.

      This situation puts all those involved at the very top (however they want to put it) with a shadow hanging over them and any businesses they want people to trust in the future.

      Businesses get into trouble, bad things happen, but it is at this point that the quality of a leader is shown, not when success is happening.

      My deepest sympathies to the staff, suppliers and customers who will not benefit from this 'arrangement'.

      Delete
  14. DV were blimmin' awful anyways. I placed an order with them a couple of years ago, they debited my card, and then declared the goods weren't instock after all ("mistake on our website" ahem) and they expected me to wait whilst they ordered them, with no delivery date available. They then refused to refund the order until I shopped them to my card issuer. Bunch of cowboys. I stick with Thomann these days

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  16. I think calling them a bunch of cowboys is a little strong, and Thomann are the cause of the industries pricing bunfight. In the same way Amazon has seen of book and record shops they'll end up doing it to pro audio.

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  17. Why would the Pet Shop Boys flop around in a storm? Shouldn't they go inside?

    Are Thomann the cause of low prices in all of Europe? In the US, our pressures are 1) Guitar Center driving mom & pop stores out of business in the 90's and 2000's, and 2) cheap cheap cheap Chinese gear, sometimes with the quality to match the price.

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  18. There are also UK suppliers who can supply some areas of DV's product range (though not the area catered for by Funky Junk) at similar or better prices but with much more reliable delivery. If you want to run a successful online business then you need to at least keep up with, or beat, your competitors - not just on price but on service too. DV seem to be stuck in the old music shop world where mail order was a sideline and customers wouldn't mind waiting a week or two. For the high volume side of their business that simply won't work any more.

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  19. Having read this through - and as an ex employee of DV247 - it becomes pretty clear that a huge amount of the initial 'facts' in the post have been quickly debunked.

    The responses to the point-by-point error list that Gavin presented have been met by a 'NO I MEANT WHITE RABBIT', but actually Gavin's post makes it clear that everything on the warranty/website/repair front has been answered, and that Eccentric has a bee in his bonnet, *clearly*, and won't let go.

    The prepack argument is something else entirely and I a much, much wider debate. But It's difficult to be swayed by someone who posts factual inaccuracies and then when proved wrong cries about it.

    Basically: Man Loses Money, Man Gets Vitriolic, Point Is Diluted.

    Rob

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    1. To add, also:

      I understand without question why people are angry. But I also think that anger is making certain folk look for clues of early collusion that aren't actually there when they're opened up to scrutiny.

      If anything useful can come out of the debate it won't be this way. And, hey: boycotting DV will surely only serve to ensure that surviving staff members and management lose their jobs too. :(

      Keep fighting the good fight, I guess.

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  20. Hi Rob,
    I have no sour grapes whatsoever about the level of our losses to DV but merely the underhanded way these were incurred. We've lost far more when other dealers have gone bust and I'm philosophical. Indeed, those dealers have usually had the integrity to phone and apologies. But a prepack is entirely different.
    If you think any of the points I raised are wrong or have been answered, then read my post and subsequent replies a little more carefully DV247 LTD is an entirely different legal entity from the trading company that went into administration on May 10th and as such all warranties, prepaid orders and liabilities are invalid unless the new company chooses to honour them ex gratia, in which case the question of showing preference to creditors arises This prepack was planned at least a month ago (as is shown by the Companies House registration I link to) following which DV quite deliberately continued to order goods on credit from dozens of suppliers, almost certainly in the full knowledge that these would never be paid for. Now, Rob, what part of that do you dispute and on what grounds?
    Still, good luck with your new PR company. I hope you get some juicy clients shortly Mark

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    1. I more echo William's sentiments - the claims about warranties being voided and website changing and repairs voided...are all wrong, completely.

      And that makes it feel incredibly weighted, frankly, and less objective.

      That's all, really. Oh and I'm a marketing manager, and not for a PR company. We can add that to the list of dubiously reported inaccuracies ;)

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  21. An interesting read all this but the article does seem to have a few glaring errors and a lot seems to be based on unsubstantiated theorising.

    As far as I can see the website hasn't really changed, the warranty is still in place as is the repair service. Indeed the warranty service has saved me twice in the past and is one of the main reasons I buy from DV. I also couldn't find anything about orders being shipped from Germany.

    I can't speak to the other issues in the article, they could very well be true but its difficult to read past the inaccurate statements.

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  22. DV247 has issued official statement:

    http://www.dv247.com/news/DV247%20Is%20Not%20In%20Administration/133450

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    1. 'The king is dead. Long live the king.'

      DV 247 ltd is, of course not in administration. Indeed, it only started trading on May 10th 2013
      DV 247 was the trading name of White Rabbit Records who entered administration one second before DV 247ltd started trading
      Let's be charitable and take this press release as confused rather than misleading
      Mark

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  23. No inaccuracies if you read my posts carefully...

    Shipments will now take a minimum of two days from the new all- singing, all- dancing warehouse featured on the new website front page. And that is in...Germany

    Any and all warranties issued by the company that previously traded as DV (White Rabbit Records Limited) ceased the moment that company was wound up on May 10th. Fact. That's the law
    If the new company chooses ex gratia to honour these warranties, that's a matter for them but they have to be careful. Legally clients with faulty (or non delivered) goods are merely unsecured creditors and legally cannot receive priority over others, such as suppliers. So existing warranties are de facto invalid (other than manufacturers warranties). Personally, I believe the new company MAY honour past warranties as a PR exercise, assuming their battalions of highly paid lawyers advise that they can. But nevertheless, legally previous DV warranties are now invalid

    William, I do wish contributors would take the trouble to read my posts before accusing me of being inaccurate. On the other hand, if this enables me to clarify any grey areas, that's good
    So thanks
    Mark

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    1. Mark

      As you have stated the new company is an entirely different entity, what they decide to do with their money is entirely up to them. Giving creditors preferential only comes into play if they were paid out of white rabbits recordings money.

      While I feel for the creditors who will incur losses & staff who lave lost their jobs, can you please enlighten me what the alternative was? As a businessman who has been on the wrong end of customers administrations in the past, none of tyhem have ever paid a dividend once the liquidator, HMRC & other preferential creditors have taken their cut. It seems to me that a lot of this must have been taken out of Mr Da Costa's hands by the banks, eager to get their money back.

      Pre -ack administrations are a grey area, but for there to be any value left in the business it has to be completed swiftly & with minimal fuss to existing customers, otherwise the brand fails. Game group & HMV being two more high profile examples.

      As I said I have sympathy for your losses, but I suggest the alternative outcome wouldn't have benefited you any more or less, but would have involved the loss of another 71 jobs from the romford office (see statement)

      FWIW I am posting as a regular DV247 customer with a deposit on a Korg MS-20 & an item in for warranty repair, both pre friday's news

      Delete
    2. So to clarify:

      For customers (from DV's just-released statement):

      "We will honour all existing orders"
      "We will honour all existing valid warranties"

      So customers aren't losing out, basically. Good.

      I will take that over sentences like "Personally, I believe the new company MAY honour past warranties as a PR exercise, assuming their battalions of highly paid lawyers advise that they can." Just sort of highlights that your opinion is set in stone and won't move despite new light being shed.

      For all of that:

      Customers are covered. Good. Maybe change the post minus hyperbole?

      Delete
    3. Mark, I did read your post and it does have many inaccuracies:

      "Want specialist advice? Learn German"

      Not true, store in U.K is still open and if Thomanne can manage to man the phones in English then I'm sure DV can too.

      "And what about warranty support? That certainly isn't going to happen in the UK"

      Not True.

      "Indeed, all warranty on goods sold by the company are now invalid."

      Not true, regardless of what's happening behind the scenes the result to the buyer seems to be the same.

      You also insist its a new website which it really isn't. There are a load more things wrong with your article but its tiresome pointing them out and you don't seem to be particularly open minded to anyone else's point of view so I'll leave it there.

      Delete
    4. So you're saying that prepack admin is morally acceptable? That taking goods on credit having already secretly decided not to pay is acceptable? This couvert behind the scenes scam is a million miles away from a genuine company collapse in my book
      And let's look at how SSL handled their administration. The administrator was appointed with the full knowledge of customers and creditors. The administrator ran the company while a buyer was found. Everyone got paid. Honest, upfront and dignified
      Don't try to pretend this DV prepack is anything other than scandalous
      M

      Delete
  24. http://www.pro-tools-expert.com/home-page/2013/5/13/should-we-care-about-local-versus-global-retail.html

    ReplyDelete
  25. I'm going to step up here and just say that every person I know that has bought from Thomann ends up getting fucked over. Before they sell any of the decent gear, they sell B-stock, factory flaws or whip together mix mash half broken polished turds that look okay until you take anything apart and realise the bastards stripped the good pickups, swap the neck, dropped in cheap ass chinese pots and didn't even have the decency to put a .000001 cent capacitor on it.

    I've seen un-refunded broken necks (at the heel and the headstock), warped necks, stripped parts, parts that don't fit, no wiring at all, un-soldered wiring and various gouges/bangs/dings/paint rash come out of their shit stores from both selling new junk, used junk and even repairs.

    I'm just going to stop and say at this point: Just wait. This is a ploy. They're going to go around buying all the firesale gear from the dissheveled businesses trying to get out of debt going bankrupt because of it then sell the shit at super discounted prices, make a killing then probably go quiet for a while or stagnate then recoup with a lay-off and another crash diet just like they did. This is pretty much how all corporate entities work in G summit countries.

    ReplyDelete
  26. It's not like I didn't predict this exact outcome 15 years ago or more..... when Music Village were knocking out EOL stock at below trade.....

    they just lasted longer than most of the other guys doing the same thing (Musical Exchanges, Turdkey, and so on.... )

    the time has come for quality retailer/distributors like funky junk, and KMR, to take back the trade..... and the public to get educated why they are dumb ass fools who get what they deserve if they don't get the message.

    ReplyDelete
  27. Seems to be some of the people commenting on here simply have a bee in their bonnet regarding German MI stores affecting the UK market. Fair enough but it is what it is and we either deal with it or pack up and do something else.
    As for DV, they hit the wall. Are you seriously expecting any company who is in trouble to pay up all their bills and staff and close the doors hugging everyone goodbye on their way out?? If they could afford to pay people off they wouldn't have gone bust.
    Your issue should be with the UK government allowing this to happen, don't expect morality from the captains of sinking ships.
    I've seen too many companys go bust because they're so busy worrying and ranting about what others are doing to keep an eye on their own business.
    Instead of wasting time ranting about morality, get on with trying to pick up the slack DV are leaving behind. Don't expect it to fall in your lap.

    Max, your quote "..the public to get educated why they are dumb ass fools who get what they deserve if they don't get the message." That's great customer service.. reminiscent of Gerald Ratner!

    ReplyDelete
    Replies
    1. Thanks for your comments,

      You make some interesting points and my future blogs will examine the nature of the current German commercial assault on the UK proaudio and MI market...for example, why Thomann advertise lower prices on their UK website than they do for domestic consumers and why the UK is becoming a dumping ground for international supermarkets.

      Another topic must of course be a discussion of what part if any morality should play in business, something I obviously feel strongly about. Should we expect morality from 'the captains of sinking ships'? Well, maybe you should ask the passengers of The Concordia who drowned because the captain steered the ship onto the rocks and then put his own interests before theirs by abandoning them to their watery fate, quite an apt simile in relation to the current discussion.

      Mark

      Delete
    2. http://www.mi-pro.co.uk/news/read/mia-questions-dv247-deal/017713

      Delete
  28. I note some puzzlement amongst a few contributors as to why I should express concern that DV247 has now effectively become a mere sales portal for a German retailer -Argos MI

    Let me explain a little about how the wheels of commerce revolve these days.

    There is a largely invisible link between a manufacturer (such as Yamaha, Roland, Neumann, Fisher-Price or whoever) and the retailer which stocks or supplies gear to you and I, the customer. That missing link is the equipment distributor.

    Gear distribution is an expensive, time consuming, multi-faceted business involving (but by no means limited to):

    Purchasing, importing, warehousing and shipping goods

    Adverting products in the trade and consumer press

    Issuing press releases about product news, software updates, new products etc

    Building, maintaining and updating websites

    Providing magazines with review items, often loaned for lengthy periods

    Providing display stock, point of sale literature and display cabinets to dealers

    Providing demo units to customers to try, usually via a retailer

    Carrying stocks of spare parts and accessories

    Employing skilled service staff to undertake warranty and other repairs.

    On this point, I saw a post on another forum from a DV apologist claiming that warranty repairs were currently returned to manufacturers overseas so DVs new process of sending repairs to Germany would be no more convoluted or time consuming than at present. This comment was either misinformed, disingenuous or downright misleading. With almost no exceptions, warranty and other repairs are carried out promptly in the UK by the relevant distributor. Furthermore, the best dealers such as Funky Junk or HHB have in-house service departments to make repairs even faster and more efficient.

    Distributors frequently arrange product endorsement and marketing campaigns

    If you experience problems with software, hardware or connectivity, it is often the expertise of the distributor that helps you, or your local store, resolve the problem.

    There are a host of other daily, costly but necessary duties undertaken by equipment distributors to make sure that your gear of choice is available, up to date and professionally supported after the sale.

    Needless to say, this is expensive. The distributor charges a modest margin to cover costs and (hopefully) generate a profit, and this is based upon the sales volume expected often after years if not decades of investment in marketing and product development.

    More in the next reply...

    ReplyDelete
  29. ...Continued from previous reply

    But now, overnight, a cuckoo has muscled into the nest.

    DV will benefit overwhelmingly from the investment of the UK distribution industry in terms of marketing, product reputation (based upon existing service support) advertising, endorsement deals, demo stock that customers can try and more. In return for all this, they will put not one penny back into the UK industry - the hardware equivalent of digital file sharing and copyright theft.

    Effectively, the new German owners will be freeloading on the back of the hard work and investment of others. The result of losing such a significant chunk of domestic sales may well send many diligent and hard working distributors to the wall, significantly diminishing choice and service to customers throughout the UK.

    This is not just a rerun of the battle between the supermarket and the delicatessen - Tesco and the corner shop. It is ultimately about choice. Because as Steve Jobs realized many years ago, the ultimate extension of the world wide web is for consumers to buy directly from the manufacturer and the power this brings to the biggest and wealthiest (and often most ruthless) operator. Monopoly follows with all that entails. In Apple's case they grabbed the right to provide downloads for our creative labours contributing to their current cash pile of seventy eight BILLION dollars. And how much have they put back into the music industry?
    Zilch

    So please think before importing your next purchase from Germany. I'm sure many customers will find they've signed up to a distinctly second rate service. But even where this new business model works in the short term, long term the implications are very, very scary.

    In the words of The Bard (Bob Dylan)
    "Money doesn't talk, it swears..."

    Eccentric

    ReplyDelete
  30. Hi all, let me tell you my side from a customers perspective. Before Digital Village there was Music Village, and before that in my town there was Cambridge Rock. One of the guys who was made redundant last week from DV was employed by Cambridge Rock and carried on a career through all the variations the shop went through. When I bought any musical item I always called Digital Village first. I was on first name terms with most of the staff - certainly all of the "lifers". I got to know these people, went to see their bands and became friends.

    If these guys had said - "we're quitting Digital Village and setting up a little shop down the road" I'd have bought from them. It was good for me that Digital Village were the cheapest, but the real factor, the absolute reason I bought from them was because I knew and trusted the staff.

    Just about a week before Digital Village announced the closure of the Cambridge store, PMT opened up a massive new shop in town. This is good for me. I hope that PMT will employ the guys that DV have thrown over. Either way I see no reason to buy from Digital Village any longer as to me it was about the personal service.

    I am sad rather than angry and I know so many hundreds of musician's in Cambridge alone who feel the same way. We have lost friends and the personal touch and that can never be replaced by a faceless organisation that caters for faceless on line customers only.

    So sorry, you have lost a good many customers over here in the east.

    ReplyDelete
  31. PMT (aka S&T Audio) also own Dolphin Music and Turnkey (Soho Soundhouse, Media Tools).

    ReplyDelete
  32. Hi Mark,

    I've been watching this story unfold and I have to say that until today's post from you even though there are the odd contradictory statements made between posts I truly agreed with your sentiments and you had my sympathy. However you've now made a hypocritical statement that I can't ignore without joining the debate.

    You wrote:

    DV will benefit overwhelmingly from the investment of the UK distribution industry in terms of marketing, product reputation (based upon existing service support) advertising, endorsement deals, demo stock that customers can try and more. In return for all this, they will put not one penny back into the UK industry - the hardware equivalent of digital file sharing and copyright theft.

    Effectively, the new German owners will be freeloading on the back of the hard work and investment of others. The result of losing such a significant chunk of domestic sales may well send many diligent and hard working distributors to the wall, significantly diminishing choice and service to customers throughout the UK.

    Can you tell me how this is different to the way in which your Funky Junk local offices work? Surely your company places a burden on the local offices of distributors and manufacturers of product in the territories within which you trade (such as Italy and France) as I'm sure that it would be correct to assume Funky Junk transfers stock between branches.

    Please, before anybody chimes in that my response is based on assumption and is incorrect please consider that Mark's original post is full of assumptions made before any official statement was released by DV.

    Best,

    Mark

    ReplyDelete
    Replies
    1. All FJ branches in Europe function as totally independent businesses and ALL purchase stock from their local distributors. There is absolutely no cross border trade of new equipment between companies as all our suppliers and local distributors will confirm.

      But clearly this new DV development is being closely watched.

      Delete
    2. Further to my post above concerning FJ European structure and the independence of our branches, and in light of today's announcement that Amazon have paid 0.1% tax on sales of £4.3 billions in the UK, I should maybe add a word regarding taxation structures within the EEC (which may or may not be relevant to DV/music Store Cologne)

      When I initially set up FJ branches in France, Italy and (then) Sweden, an expensive (but ultimately dreadful) accountant advised that I set up a holding company in Eire and then charge 'management fees' -effectively draining any profits - to this Eire company. Any profits would then be subject to less than 12% corporation tax as opposed to 28% (then) in the UK and substantially more in France, Italy and Sweden.

      I slept on this for a week and then instructed my very reluctant (former) accountant that I intended each company to be subject to the laws and tax regimes of the country in which it operated - the country that provided health, education, roads and policing that benefited my staff in those countries Funky Junk has ALWAYS paid tax in full in the countries in which the branches operate.

      I guess a lot of readers will regard me as an idiot for not taking advantage of legal tax loopholes. Maybe I am. That's my choice. But I'd be very, very interested to know the corporate structure and tax relationship between the new German owner and DV247 Ltd

      Mark

      Delete
    3. "DV247 limited is a UK registered company which will pay VAT and corporation tax."

      You're welcome!

      Delete
    4. Rob,

      Are you honestly unable to take a step back from this and realise that there are a great many extremely well informed members of this industry who are going to have very valid and well founded issues with this situation?

      Just one example for you...

      http://www.mi-pro.co.uk/news/read/mia-challenges-dv247-deal-calls-for-creditor-unity/017730

      Best,

      Adrian.

      Delete
  33. Update...

    Yesterday a customer bought a faulty Focal monitor into our service department, Boffin Island, for repair.
    Having diagnosed a faulty amp, the client asked for it to be repaired under warranty. However, it transpired that he'd bought it from Digital Village, so we referred him to them.
    This morning we recived the following email...

    Hi Steve

    I just spoke to DV. Because of their current business situation they're unable to commit to a warranty policy right now. I'm pushing them to offer me a solution which I suspect will involve me covering the repair costs and getting a credit note, or something.

    Please sit tight for now, I'll update you tomorrow.

    Best

    So, the 'four year warranty' appears to have lasted less than two weeks.

    Surprise surprise...

    ReplyDelete
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