FIFTH BANKRUPTCY

Gisborne Times, Volume LXV, Issue 10318, 29 January 1927, Page 11

FIFTH BANKRUPTCY

FAILURE OF TEA AND CONFECTIONERY SHOPS. ; .

ISRAEL GELHOR’S AFFAIRS

MATTER TO BE SUBMITTED TO

CROWN SOLICITOR

“I consider I would bo failing in the matter if I did not submit this case to the Crown Solicitor.” In these words the Deputy Official Assignee (Mr.' C. Blackburn) concluded an exhaustive examination into the affairs of Israel Gelhor, whoso Elite and Majestic confectionery and tea-rooms business failed after six months trading, at the first meeting of creditors yesterday. The Deputy Official Assignee (Mr. C. Black#urn) presided, the following creditors being present or represented : Mr E. J. Poswillo; Mr. IV. U. Chrisp, representing the Poverty Bay Herald Co.: Mr. J. R. Kirk, representing Stubbs and Co., and J. T. Hill; Mr. F. Barwick; Mr. H. B. Gardner; Mr. O. J. M. Alley, representing Murray, Roberts and Co.; Mr. T. A. N. Corson, representing T. Corson and Son; Mr. W. McKinnon; Mr. T. G. Lawless, and Mr. Whinray. Mr. S. V. Beaufoy appeared for tlie bankrupt. The Assignee commented on the stress bankrupt had laid in his statement on the fact that various companies had doubled his orders and this was his main reason for filing, being unable to meet the accounts. Under examination by the Assignee bankrupt stated that when he received goods he retained them pending the arrival of the company’s traveller, under instructions from the company. On the arrival of the traveller some of the goods were sent away, and he stored others away. He had given six post-dated cheques, which did not amount to £IOO, and there was about £2OO worth of goods. He ordered about £4O to £SO worth, and gave cheques amounting to about £145. It was a big amount and they agreed to monthly payments. This was not his usual method of business. He did not keep a note of the amounts, nor copies of the orders to J. W. Roberts and Co.

None of the companies, he said, cut down the orders, but did tlie reverse.

The Assignee : You might he surprised to know that some of the creditors will say the orders were cut down P—That might have been done with the goods for the dining-room, but not with the confectionery. Further examined, bankrupt §p.id he went into the shop in Gladstone Road about October 16 with the hope of bettering himself. He was then owing about £l5O, but he thought he was quite right in extending his business, as all that ho owed for he had on the shelves.

Tlie Assignee: You had nothing to warrant your establishing the business in the Gladstone Road shop, and this increased your liabilities P—l thought I would do all right. - Bankrupt admitted that the >ent of the '‘Elite” was £3 10s, and of the Majestic £6 10s weekly, while the wages of the four assistants ran into £6, and electric light bills amounted to £3 10s 5d per month, in addition to which there were gas bills and house rent in McLean Street, so that his liabilities were £24 a week without his sinking a penny of capital. The Assignee: You continued to sail on increasing your liabilities with your creditors with the Majestic shop?—l was paying off a little every week.

I think that you shouldn’t have gone into business in the. Gladstone Road shop. What capital did you have when you went into the business?—£2s. Was it your own money or was it borrowed?—lt was borrowed. With debts totalling £SS3, it looks as though you got well ahead of your capital. Did you think that £25 was sufficient to start a shop in Gladstone Road?—Yes. You’ve been in the conieetionery business before? —Yes; 25 years ago in Palmerston North. You filed there too didn’t you?— No; not in Palmerston North. The partnership was dissolved. , But vou filed in Palmerston North in 1922?—'N0. But vou did. I’ve got a statement here from the D.O.A. in Palmerston that you filed there in 1922?—Yes; but not in connection with the confectionery business. What did you do after being a confectioner? —I went into the taxi business in 1922 at Shannon, and this lasted for IS months. There were not many taxis 25 years ago. What were you doing between 1932 and 1922?—1 don’t remember. After 1922, bankrupt said, ho became a wool buyer until the slump when lie failed.

Proceeding, Gelhor declared that after IS months in the taxi business, which he started after his first bankruptcy he failed in Palmerston North. The Assignee: Have you filed since then?—Yes; in Wairoa 12 months ago. What caused your failure there?— The slump. Did you owe the creditors much?— I owed verv little to unsecured creditors and most of the property securities went back to the mortgagee.

Did you not also file about 20 years ago ?—Yes; but I paid up everybody. Where was that?—ln Wellington.

I suppose you were. getting an adept at it. You filed in Napier too, didn’t you ?—Yes. When was that?—After the slump. (Laughter.) What was the cause? 4 —l owed money to the bank over the wool business. What were you doing in Napier?— I was a confectioner. Mr. J. R, Kirk: He’s a great supporter of the Government in fees. (Laughter.) “Oh,” retorted the D.0.A., dryly, “I don’t know, there might not be any. assets.” (Laughter.) “I wonder how the solicitors got on,” observed Mr. S. V. Beaufoy. The Assignee: When Avas it that you filed in Wanganui. I’ve got a record, that it Avas in 1906?—Yes, that’s right.

Questioned further.by the D.0.A., the bankrupt denied the suggestion that he had any money in the Post Office.

Have you given anyone else money to put away for you?—No; I haven’t got any money of my oavii in anyone clse’s name. Have you got anyone else’s money? —No. Have you given anyone money to put aAvay for you?—l gave £4 10s to one person but that Avas outside the business. Did you correctly put all the returns of the cash register on the memo receipts?—Yes. And you didn’t take anything out of the cash register and record only the balance on the receipts?—No; every shilling is recorded. I notice that cheques have been drawn at different times for Mrs. Gelhor?—l gave.her £1 a Aveek Avlien I Avent into the Majestic. Your Avife failed' Avith svou once didn’t she? —Yes. Where does she live?—ln Sydney. Why are you living apart ?—X can’t stand the beat over there. (Laughter ) “It’s pretty hot in Gisborne also,” observed tlie Assignee <lrilv amidst laughter. ' "•Gelhor further stated that some peoplo Avero renting the house from him in -McLean Street Avliere he had a room. Two of the waitresses from 'the- shop stayed in the house in MoLean street. They had their

meals at "the shop, he paying them 35s a week and providing meals. " ' Proceeding, Gelhor stated that lie was first pressed by his creditors just before Xmas, an' Auckland firm being the first to push him. The Assignee; Nobody wrote demanding payment before then?—No. How long before Xmas was it that the Auckland firm pressed you ? They sent me. a summons on December 19.

You had no indication, of pressure until you got the summons?—4es.; in a. fetter a- few clays before. He asserted that none of the local firms had pressed him although some creditors had asked him when he intended to pay accounts. Cross-examined by Mr. Kirk, bankrupt declared that he had been discharged from all his bankruptcies', receiving bis last discharge in M&y last year. He commenced business in Gisborne in. July that year. Mr. Kirk : Who were the optimists who started you in business?—l don’t think anyone started me. Well how did you start. • You had no money in July, two months after your discharge. Who was the' optimistic gentleman who loaned you the £25 to start business?—l do not wish to disclose his name. “ You’ve got to tell us.” The Assignee: Everything has got. to come out here. Well, if you want to know,” replied bankrupt, “it was Mr. Frank Wise.” Mr. Kirk: Yet you’ve sworn to all your debts to the D.O.A. and yet here is/ a debt of £25 which is not included in the statement?—l did not mean to disclose it. Is Mr. Wise a personal and intimate friend of yours?—Yes. Did he know that you had been bankrupt four times previously?—l suppose he did. Did you tell him that you had?— I’ve known him for 12 years, but I’ve never conversed with him much. Have you been paying any money to anyone of which there is no record?—No. You got Mr. Hill to allow you to have £7O worth of goods but you didn’t disclose to him you had filed four times previously ?—lf I had known he was going to lose the goods I wouldn’t have taken them. The only excuse you’ve given lor your bankruptcy is that you allege the merchants overloaded your orders. Why didn’t you send the goods hack and defend any action the firms might take against you?—l could not go to Auckland. Then you knew you could defend any action?—Yes. Didn’t vou consult your solicitor? — Yes. You couldn’t have told him what you are telling us ?—Yes. Mr. Kirk -. If you sold only the goods you ordered how is it you are bankrupt?—l don’t know; my expenses were higher than my profits. Regarding the goods you obtained on tune payment from Mr. Stubbs, are all the goods in the shop now? — [ have sent nearly all the goods back to Mr. Stubbs. Are you sure?—Yes. Bankrupt denied that there was any money owing to him which had not been disclosed in the statement. Mr. Kirk:' I suggest that £3O is owing to you?—lf it is, I don’t know of it. Is not £3O owed to you in respect of a lorry in Wairoa?—No. Bankrupt admitted that lie hud told some people in Gisborne that £3O was owing to him, explaining that he had .sold a lorry to Oswald James for £2OO and had started him in business in Gisborne, lending him £3O. The carrier, however, had repaid £l5O the balance on the lorry, and the £3O loan six months later. Have you had any fires, drawn the insurance ?—5 es ; in i’almerston North. The insurance was £350 on £9OO worth of stock in a confectionery factory.

To the Assignee, bankrupt admitted that he had promoted a company there and it had fallen through. Mr. Kirk: Will you be more candid about this £4 iOs you’ve got. - " A young limn was going up the Coast to buy wool and. not knowing .its value, he asked me to do tlie work for which lie gave me £4 10s. Bankrupt admitted that lie had loaned Mrs. —— » small sum, and that it was all he had. Where was that?—She was housekeeping for me in Wairoa. Bankrupt admitted that lie had promised to pay Mr. Stubbs £3O within a fortnight of getting the furniture, he having been promised £3O by a’firm oil the sale of a motor truck to a friend who wanted a lorry, but the deal did not come off. Bankrupt, in reply to the Assignee, admitted that he did not keep copies of his orders which were given verbally, and further admitted that he had ordered chocolates in cwt. quantities, which he claimed were always increased. The Assignee: When you ordered from Mr. McKinnon did he always deliver more than the order?—Yes. I ordered £7 worth from Mr. McKinnon, and at first he senjj £24'worth. Questioned by Mr. McKinnon, bankrupt stated 'that when lie was in tlie Peel Street shop lie had returned goods to him (Mr. McKinnon) for being in excess of the order. Mr. McKinnon: We have no record of it. Bankrupt: That’s the truth and you know it. One night you ordered some goods from me; what were they?—Jars of sweets.

Mr. McKinnon : Why did you tell the Assignee that Avlien you Avent into the Gladstone Road shop you had only £l5O of‘debts? It seems to me that I ivas, the only creditor for yon owed me almost that amount. Bankrupt further admitted that on seeking Mr. McKinnon’s advice as to the advisability of opening up the Majestic the latter advised him not to attempt it unless lie had £SOO capital. Mr. Wise counselled him similarly. Mr. McKinnon: Then why did you ask my advice if you were going to disregard it?—l thought I would, do Aveli. "(Laughter.) Further bankrupt admitted informing Mr. McKinnon that on opening up" the main street shop, as he had placed an order for £4OO, he could not give Mr. McKinnon so large an order as he had hoped, Avherens he had only placed one order, Avith an Auckland firm. You gave me an order for a CAvt. each oßthrcc lines of chocolates and Amur invoice will slioaa t you that I cut the order down to 361bs. and I CAvt. respectively as I. could not see your need for such large quantities. The order you gave me Avas Avortli £209 and I cut it down to £IOO ?—I didn’t sign the order. The invoice will ptove that only £ cwt. avas delivered to you —The order Avas not signed by me. Do you sign any orders?—No. Would you do so?—Not if I could help it. Who is guaranteeing your account at the hank? —lf the Assignee Avants to knoAV That is a legitimate question.— Well. Mr. Wise is guarantor. Mr. McKinnon: Why did you continue to .deal Avith me if, as you say, I continued to double your orders?— If I had been a harder man I Avon Id not have continued dealing Avith you. (Laughter.) . „ U I wish you had boon harder echoed Mr. 'McKinnon. Did you order any goods which merchants jefused to deliver?'—Y cancelled two others. Mr. A. Corson: Were there _ onv | local merchants Avho ’ refused delivery ! of goods to you? ; Mr. ’ McKinnon: Or outside merchants?—No.

Mr. Corson: Do you remember ordering cigarettes from O’Meara’s and giving Common, Shelton’s name as a reference ? —No. O’Meara’s asked me with whom I was dealing and I told them Common, Shelton’s. And O’Meara’s refused to deliver the cigarettes ?—They sent the cigaretteS round and I refused delivery because I found I could obtain them at Common, Shelton’s. Further questioned by Mr. Melvinnon, bankrupt stated that Itowntrec's agent here had not refused certain goods to him. He had cancelled tin* order.

Mr, Kirk; "What are you doing now ? —Nothing.

Is it a fact that you’ve been up the Coast lately buying wool and offering to pay cash ?—1 was buying wool but not for cash.

Replying to Mr. McKinnon, the Assignee stated that stock in the Majestic was valued at £159 and the Elite £93.

Mr. Kirk proposed that an advisory committee, comprising Messrs. Alley and McKinnon, be appointed to act with D.O.A. in the disposal of the' stock, but after discussion it was decided to leave the matter to the D.O.A. alone.

Letters from two Auckland firms asking that the bankrupt be examined in that city were read by the Assignee, who said that he did not see the necessity and feel disposed to pay the bankrupt’s fare to Auckland for examination by five creditors.

Bankrupt should be examined further elsewhere, said Mr. J. R. Kirk. He contended that bankrupt was trading on fictitious capital. When lie went into the shop he had nothing but £25 of borrowed capital. <; I agree with the Official Assignee in Auckland when he said recently it’s time that the traders who are prepared to be reasonable with people should be protected, and it is specially time that the Gisborne traders should be protected, for the number of bankruptcies is out of all proportion.” He moved: "That this meeting authorise the D.O.A. to consult the Crown Solicitor as to whether the evidence in this case is such as to warrant a prosecution for carrying on trade by means of fictitious capital, or by any other breach of the Bankruptcy Act.” The motion was seconded by Mr. A. Corson. The Assignee: I consider I would lie failing in my duty if I did _ not put the matter before the Crown Solicitor. The motion was dispensed with, it being unanimously agreed that the D.O.A. should consult the Crown Solicitor.