Quote:
Originally Posted by Exhibitman
"Marx, which had been approved by PSA as a group submission outlet, indicated it had taken in over $954,000 in 2020, had $4.4 million in revenue during 2021 but because of its debts, ran out of money in August."
"the company says the suspension of PSA’s lower cost services last year resulted in a disruption of its revenue. After ramping up its business in 2020 including the opening of a storefront, Marx says it “was in so much debt that all revenues were being absorbed by the daily and weekly payments to merchant banks which made loans to the business.”
"In the bankruptcy documents, Marx blamed PSA’s 2021 shutdown of most service levels on much of its troubles, but also cited another business’ failure to pay some $60,000 it was owed and two bookkeepers it hired. In its filing, Marx indicated the bookkeeper paid herself about $50,000 more than the $48,000 per year salary she was supposed to receive. Both of the company’s bookkeepers left their jobs in November of last year. It also says a customer failed to pay a $60,000 debt to the company related to card grading."
So, gross revenue quadrupled but a $110K loss ate the customer money? Suuure. The Marx guys should be going to jail for theft for what they did. Lots of businesses get money from customers in advance. Whether you call it a deposit or a retainer or an advance, it is still money paid in trust for a service. That money should have been there held in a segregated account regardless of the company's financial woes. Instead, it sounds like Marx treated it like a piggy bank and in effect ended up running a ponzi scheme.
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Adam,
I thought the exact same thing you did. This bankruptcy filing is either due to complete business stupidity, or tantamount to intentional criminal theft, or a combination of both. Otherwise, how after more than quadrupling your business in a single year can you suddenly end up with assets less than $100K, and debts exceeding $1M. There is no major inventory or capital investments required for what they were doing. You could literally run the type of service business from your house/garage if you really had to. So, what were the monies from the debts they incurred used for? This doesn't add up at all.
For one thing, the bookkeeper that paid him/herself the extra $50K, that is embezzlement. I wonder if they pressed charges and are looking to recover at least some of that embezzled money. I would certainly expect the bankruptcy court to ask such a question. And why did they suddenly have to open up a storefront? I don't really think you'd be expecting a steady stream of customers to come walking through the door for this type of service. If so, during the pandemic and all, you're a complete idiot. And the one outfit that stiffed them for $60K, as with the embezzling bookkeeper, I'm fairly certain the bankruptcy court will be interested in the status of that potential claim as well.
I've been involved with businesses and accounting for long enough to know that this Marx bankruptcy stinks to high heaven. Just from the few details put forth in this thread, the situations screams as to the owner(s) or somebody draining money from the Marx company to put them in their current bankrupt position. And yes, I have personal experience over the years dealing with businesses and people that have embezzled or misused funds, or that have run themselves into the ground (and bankruptcy) for stupid and intentional reasons. As I had stated in an earlier post, I would hope the Marx owner(s) can be held to at least some personal liability in this case, if not potentially some criminal charges as well. Unfortunately, the way our legal system is set up, people very often walk away from such bankruptcies with little to no damage or consequences, and no liabilities to themselves personally. Many supposed great business minds seemingly use bankruptcy as an ongoing tool to get, and stay, ahead. All the while damaging and hurting countless other people and businesses, while they walk away virtually unscathed. I just wonder now what the underlying case is with this Marx company, and how that will end up?