From Financial Position Report…
“BCS Explanation of the causes of the Company’s failure:”
<More like a potted history>
The Company was established in early March 2011 by Mark Andrews and Tony Leetham as equal shareholding directors.
The Company acquired the rights to Doctor Who from BBC Worldwide to develop, manufacture and retail a range of high-end 1:6 scale collector figures based on the characters from the popular TV series.
We approached NatWest bank for funding and secured an initial investment of £75,000 via the Enterprise Finance Guarantee (EFG) scheme, plus a £25,000 overdraft. This would enable the Company to make 500 pieces of each of the first two planned collector figure releases, plus the related tooling, including standard male and female bodies.
During this time, we had been developing the first figure and had received initial cost estimates based on images sent to the factory of $36.00 per piece. We shipped the master prototype out to our vendor for them to begin work. Once they received the prototype, they reverted with a final quotation to manufacture, which was more than double of their initial estimate at $74.00 per piece.
We received an initial order from a major US distributor, Diamond Comics, for 750 pieces of the Eleventh Doctor and 600 pieces of the Amy Pond figure. Whilst an excellent opening order, we did not have sufficient funding to manufacture these quantities, plus additional pre-orders. With the increased manufacturing costs, we were forced to source a new vendor in China.
With a new vendor in place, we had the tooling that had been created by our first vendor transferred over to the new vendor. We were forced to pay more money over for the release of these tools, impacting our already tight budget. Furthermore, there were problems with the tooling for the female body that was deemed unusable, so a new body had to be created at additional cost to the Company, whilst negotiations for additional funding were undertaken.
We began discussions with Hartswood Films early in 2012 and secured the rights for our second licensed brand, Sherlock, in May 2012. Our first Doctor Who figure, the Eleventh Doctor, was released in August 2012. Our second figure, Amy Pond, was released in May 2013.
The vendor we had been working with to produce our first two figures had caused several issues that ultimately led to the delay in the release of these pieces, and so the decision was made to move production to a new vendor. We travelled to China once again and met with the new vendor, a company we had worked with extensively in previous roles and that were now looking to move into the collectables market.
In June 2013, additional funding of £50,000 was received in the form of an unsecured loan from a private investor, Marc Silk / The Production Pit Ltd. Later in 2013, we released our Dynamix figurines and a further 1:6 scale figures to the marketplace.
Big Chief moved to new larger premises at 96 Bell Lane, The Reservation, Kitts Green, Birmingham, B33 0HX on 1 April 2014. Numerous figures from the Company’s range were made available for customrs to pre-order, with previously announced figures being shipped throughout 2014.
Despite positive levels of pre-orders intiially, a decline in pupularity of the TV series upon which the Company’s figures were based let to a decrease in customer pre-orders received
.2015 similarly saw the Company announce new figures for pre-order and shipped previously announced figures to customers, with 2016 seeing the expansion of the Company’s licensed brands with exciting new announcements for the Gerry Anderson portfolio with ITV in April and James Bond with EON Pictures via IMG in September.
In February 2017, the Company exhibited at Spring Fair in Birmingham, to showcase its newly announced licensed products relating to the James Bond and Gerry Anderson stables, resulting in solid pre-orders these newly added brands.
In a bid to maximise sales, the Company took on a full-time salesman to help drive the business into new areas.
In July 2017, the Company exhibited its products at the legendary San Diego Comic Con to showcase its latest products, including the James Bond, Gerry Anderson, Doctor Who and Gladiator product lines. In order to allow for the manufacture of these items, the Company sought significant further investment into the business.
The Directors sought additional funding via Funding Circle, who proposed to loan the Company £200,000. Tony Leetham, the former co-director, was not willing to personally guarantee any lending obtained, and as a result he chose to resign as a director and relinquish his remaining shares to the remaining director Mark Andrews. As sole director, Mr Andrews signed the funding agreement with Asset Advantage, agreeing to a second charge being secured against his personal property to support the business.
Over the years, the Company had experienced a number of issues working with its vendor, Enseng. Virtually every release had some minor issue that resulted in replacements or returns. The most serious issue ocurred with the Company’s “Goldfinger” figures, which was particularly frustrating given how important the James Bond license was for the Company. An error in the packing of the figures, which had been identified and brought to the attention of the vendors, resulted in the figures arriving to customers with paint removed from the heads. Replacement heads had to be organised with the factory which took months, as well as causing the Company to incur additional shipping costs. This seriously damaged the reputation of the Company, impacting sales of the Goldfinger figures and the next figures in the James Bond line, Live and Let Die.
There were also quality issues with the Gerry Anderson Thunderbirds figures. As such, the decision was made to part ways with Enseng.
The resulting move to a new vendor caused delays in the release of several of our pre-orders, which adversely affected the Company’s cash flow. Additional funding was secured to enable us to continue to deliver, with 2018 seeing additional figures released, with further pre-orders to expand the collections, with new offerings from the Peaky Blinders brand, as well as adding the Only Fools and Horses and Dad’s Army brands to the Company’s license portfolio.
2019 similarly saw additional figures released, but with fewer products available to preorder as we attempted to clear the backlog.
In 2020, the Company released the second James Bond product offering, “Live and Let Die”, before the onset of the global Covid 19 pandemic and the resulting lockdowns
With the factories producing the figures locked down, the tooling and manufacture of product was seriously impacted. This continued into 2021 when we ceased any new pre-orders for our own branded 1:6 scale figures, preferring to focus on clearing the backlog. Further products were released in 2021, but with continued lockdowns, plus governmental restricted use of energy by factories in China, the Company continued to experience delays to its rollout schedule.
As the pandemic subsided and and restrictions were lifted, we found that factories were preferring to focus on higher volume order customers that would deliver greater revenue for their operations, in effect demoting the Company’s lower-volume orders to the back of the manufacturing queue.
As a result of the pandemic, worldwide shipping costs increased fivefold, with the price for a 20ft container from China to the UK increasing from £2K to £10K, further impacting the Company’s tight budget.
As we moved into 2022 life in the UK had all but returned to normal. However, this was not the case in China, with their zero-tolerance policy a single case of a person testing positive for Covid 19 saw the closure of an entire port. This continued up until the fourth quarter of 2022.
With the Company attempting to work through the backlog of preorders figures, the rollout of new products was further delayed, although the Company was able to release three Flash Gordon and two further James Bond figures.
The Company had expected to take delivery of the Peaky Blinders figures in August 2022, but with ongoing Covid 19 restrictions in China, these did not arrive until March 2023. This resulted in a large number of cancelled orders due to the delays, with the largest cancelled order amounting to $33K from a US-based customer.
Whilst we did our best to promote and drive sales of the figures, the combined pressures of the economic downturn, high interest rates and cost of living crisis meant that sales of the figures products had significantly tailed off. We ran a promotion throughout July that saw us reduce the figures to just above half price, the figures started to ship, but were still not moving in sufficient volume.
With the above issues not showing any signs of abating, it had become apparent that the Company was unable to pay its debts as and when they fell due. With no existing investors willing to invest further funds into the Company, the board of directors sought professional insolvency advice from Begbies Traynor (London) LLP. As a result, it was decided that steps should be taken to place the Company into creditors’ voluntary liquidation
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