It’s been a sorry year for music retailers, what with the Allans Billy Hyde debacle that saw the popular retail chain placed into receivership, with debts of over $40 million with hundreds of jobs feared to be lost, until former competitor Gallin’s Music swooped in to purchase the music retail chain at the last minute.
Now comes news that a guitar shop in Sydney, down the road from a former Allans Billy Hyde store, has gone into receivership amongst contention over the possession and rights of the rare and vintage instruments that were sold and stored on its premises, and as it sinks, its taking nearly $850,000 in consigned stock down with the ship.
As The Age reports, Jacksons Rare Guitars, located off the busy Parramatta Road in the inner-west suburb of Camperdown, sold vintage and rare guitars on consignment. Since 1988, the humble store has sold axes to some of music’s biggest names, including George Harrison, Metallica, Slash, as well as local artists like You Am I and Mia Dyson; but mounting financial difficulties has forced the retail store to go into voluntary administration last month.
As CXBlog points out, the insolvency and liquidation of the store’s assets includes an upstairs safe-room that’s a veritable treasure trove of rare guitars, some worth up to more than $50,000, but many of the owners of the guitars – who were sold them on consignment – may see their possessions scooped up to help pay off debts as part of a bizarre legal loophole.
More than 100 clients could risk losing their guitars – approx. $850,000 worth of total stock – due to a pitfall in something called the Personal Properties Securities Act, which – as The Age points out – came into effect at the start of the year on January 30.
The little-known act requires the owners of consigned goods to lodge details with the Personal Properties Securities Register – an electronic database – which can be searched by potential buyers, unlike previous laws that used cosignment notes as proof of ownership.[do action=”pullquote”]”It is not easy, after 30 years of building the business to such heights, to watch it deteriorate.” – Steve Jackson, owner[/do]
Personal property, possessions such as cars, boats, furniture, machinery – and of course, guitars – must be registered in order to be claimed, which means that in the current situation where Jacksons Guitars are selling their assets due to their collapse, unregistered goods are fair game for clearing debts as insolvency form is entitled to retain and sell anything that isn’t covered by a listing on the registry, regardless of proof of ownership.
Steve Jackson, the store’s owner, told creditors at their first meeting on November 28, that he had done everything in his power to stop the shop going under.
“It is not easy, after 30 years of building the business to such heights, to watch it deteriorate,” says Jackson. “‘I did my best to try and save the store but I couldn’t, and for this I offer my sincere apologies.”
Jamieson Louttit & Associates, who took over from Deloitte in handling the administration, said Mr Jackson had signed off on a pledge to sell a collection of 10 vintage cars as partial repayment to the debts owed to creditors; but a recent report from the administrators allegedly raises concerns that Jacksons guitars may have been trading while insolvent “as early as June 2010.”
Looking back the plot thickens further, with CXBlog hinting at a strange conspiracy theory in which consigned guitars that were stored at Jacksons Guitars were being sold and re-sold as investments in self-managed superannuation funds.
Just as the Personal Properties Securities Act provides a loophole to sell off unregistered consignments, guidelines over valuable collectibles used as a superannuation investment – like artwork, jewellery, and – yes- antique six-strings, states that valuables can’t be displayed at home or in a business, and must be ‘held’ by a responsible party – which is where Jacksons Guitars comes in.
As CXBlog notes, some allegations have surfaced where owners claim their consignment guitars were sold without them being advised or paid, without the guitars ever leaving the premises – as they were sold on consignment.
While it’s clear that Jacksons Guitars shop has finished strumming its final chord, it seems that there’s still one final jam to be had – a very sticky, potentially ugly one.