N.Z. Loan and Mercantile Agency Co., Ltd.

Manawatu Herald, 17 April 1894, Page 2

N.Z. Loan and Mercantile Agency Co., Ltd.

Sir Edward Stafford, who was called to give evidence, said that at meetings of the Board of Directors most exciting discussions had taken place regarding the reports furnished by Mr Falconer Larkworthy and Mr David Elder. He (Sir Edward) admitted that one-third of the sum divided in 1892 was composed of unearned interest which had been placed to the credit of the profit account. He also admitted that he had failed in his duty as a director in not enquiring into certain items in the balance-sheet. The holders of the unconverted debentures in the Company claimed priority or equality with the converters, on the ground that the old prospectuses gave security. He had objected to the bondholders of 1892 receiving preference, and he understood the others were afterwards placed on an equality. He regarded Mr Larkworthy's reports as historical romances. Judge Williams said it was difficult to believe that Sir Edward Stafford had forgotten the Compony's manipulation of its accounts. His Honor, speaking in reference to the reconstruction scheme, held that it was clear that that scheme was drawn on the basis of the right of the holders of Baron Schroeder's debentures to have the whole of the unpaid capital appropriated for their benefit, but in the event ot failure this right was very much open to argument, and he required evidence that the creditors were aware of the facts when they assented to the scheme. He also wanted an ansurance from the holders of Baron Schroeders debentures that they would grant a further concession if such was requisite, without com. pelling him to act. His Honor hinted that he might bring pressure to bear in the matter, as he recognised the necessity of disposing of the reconstruction scheme without delay, or it would be a failure. The liquidator stated that there was plenty of floating capital when the Company was restored. The discussion on the scheme was adjourned till Friday. Sir Edward Stafford, in hia examination, said he had strongly objected to the security given to Baron Schroeder. He admitted that Mr Larkworthy had warned the. Board against -dealing with thfi' Waikato lands. He added that nine-tenths of the present lock up of the capital originated with the Colonial Boards. Sir George Russeli, ona of the directors, admitted full responsibility, but said he was unaware of many incidents in connection with the administration of the affairs of the Company. It is doubtful whether Baron Schroeder will make any concession. Counsel representing the Creditors' Committee informed the Court that it was impossible to extort a further concession from Baron Shroeder. His Honor accepted the position with regret, and admitted tliat there was no power to alter the recon struction scheme with regard to the security. The sanction of the Court, however, would not affect the liability of the directors and the officers of the Company in the event of pro* ceedings being taken. Mr Justice Williams said he sanctioned the reconstruction scheme, believing that the Company would be successful in the future if those personally interested would cordially support the scheme. He was not satisfied that the scheme treated -the unconverted holders with injustice. He recognised that the holders of the sixth issue had been deprived of rights of priority, but not sufficiently to justify him in the refusal of the scheme. He remarked that if he refused to do so he would only punish the weakest' bondholders. Sir George Russell admitted that the directors had been neglectful personally. Sir John Gorst stated he had not noticed irregularities in the report of 1892, and he accepted the responsibility. He admitted that Mr Thomas Russell was unable to meet his liability at the time of the transfer of the shares, as he was hopelessly insolvent. He said it was extremely wrong for the Company to insert in in the profit and loss account of 1892 a portion of the suspense fund, also interest which was not earned. The Court adjourned till Thursday. The new directors ot the Company include Mr Martin (of Turnbull, Martin and Co.), Mr John Beaumont (formerly of Christchurch), and Mr W. W. Oswald, The directors intend to increase, the frozen!' iheiafc Business ' arid to advocate a scheme of immigration of farmers with small capital. It is expected that they will apply the pruning-knife in dealing with encumbered properties. The Times states that it is safe to assume that the Company is certain of reconstruction, and it is expected that the New Zealand Government will assist the emigration scheme.