BANKRUPTCY TANGLE

Sun (Auckland), Volume III, Issue 764, 10 September 1929, Page 10

BANKRUPTCY TANGLE

liquidation problems LIABILITIES OF £22,000 Complications in investigation lie before the official liquidator in the affairs of a building and contracting company wound up by order of the Supreme Court. rpHE liabilities total £22,000. To -*• ordinary creditors, the sum of £14,000 is due; to post-liquidation creditors, £ 3,000. The fund of assets is £6,000, belonging to the postliquidation creditors. When the creditors met this morning, the large Chamber of Commerce Hall P'as needed to accommodate them. The firm concerned was Cecil A. Hee, Limited, which went into liquidation on January 30. Opposition was raised in the Supreme Court last month to a petition for the windingup of the concern. The order was granted by Mr. Justice Ostler, who found that the firm was incorporated in February, 1925, with a nominal capital of £B,OOO, and, in less than a year, went into voluntary liquidation with a deficiency of about £14,000. It had given an unregistered bill of sale to a firm of creditors and an unregistered mortgage over its leasehold. On January 28, 1929, it gave a cheque for £136 to a creditor, and his Honour was inclined to regard a question of whether there was fraudulent preference. On January 30, there was a sudden Seizure of the plant by the firm holding the unregistered bill or sale. The plant was auctioned at gross undervalue, decided his Honour, to a mushroom company incorporated only two days before the sale. The company had valued the plant at £6,000, and it was sold on March 1 for £I,BOO. A second firm had given the bill of sale over the plant to the first firm, and ihe leasehold, too, for £2,250. “If these two firms were eliminated,” summed up his Honour, “the large majority of shareholders in value would desire the order I am about to make.” At this morning’s meeting. Mr. V. R. Crowhurst. presided as official liquidator, and had Mr. V. N. Hubble appearing with him. A long discussion resulted in the passing of a motion sanctioning the use of money from the fund of postliquidation creditors’ assets, £6,000, by the liquidator in investigating the position as set out in an agenda. POSITION MADE WORSE Mr. Hubble explained that there would be consideration of certain reports which revealed that, after the liquidation, it was anticipated there would be a profit out of contracts held by the company. An attempt was made to realise from the contracts, but the business resulted in the incurring of £B,OOO fresh liabilities. As assets, about £G,OOO was available. There would not be sufficient to pay postliquidation creditors 20s in the £. It was a question for the court to decide the distribution of the assets. in an agenda read by Mr. Hubble, points included consideration of a report by liquidators under the windingup, consideration of a report by the solicitor for the petitioning creditor, the provision of a fund to pay the liquidator's expenses, the basis of distribution of certain funds, and investigation into the transactions of the voluntary liquidators of the company, or any persons involved in the actions subsequent to the winding-up. Mr. Hubble mentioned the view of the liquidator that post-liquidation creditors should share equally in the £6,000 assets. If others claimed lien on the sum, the claims would be contested in court. COSTS FROM ASSETS To test the feeling of the meeting, a creditor moved that the costs of investigation of the transactions mentioned in the Liquidator’s report should be paid from the funds of the company- coming into the hands of the Liquidator. This was carried after an amendent recommending payment' from the funds for preliminary investigations only had been defeated. >vhen sanction is sought in Court for the investigation, details of the voting, as it affected ordinary creditors and Preferential, will be given. opposition we are getting today «° the motion is a movement to frustrate official investigation,” declared a creditor after discussion. The suggestion was strongly denied by a group of creditors, and Mr. E. H. •Northcroft. representing a firm which opposed the petition for winding-up m the Supreme Court, said the voluntary liquidators favoured investigation. “There has been a suggestion of wrong doing during liquidation,” Mr. Northcroft said. Another solicitor thought that a suggestion was being “noised abroad” hat the creditors who opposed the court petition had something to conceal. His clients objected to fruitless" inquiry.

Certain subjects have brought adverse comment from a judge of the supreme Court.” said Mr. M. R. Reed, representing tho firm of creditors c* l . Petitioned for the winding-up. An investigation will be for the benefit of all concerned. Here is a case in which all the assets were destroyed in an hour. Certain creditors did not follow the spirit of cooperation among creditors. The companies law protecting creditors advises the registration of deeds of transaction. it is selfish to oppose the use funds, as suggested, as a fighting sum to get to the bottom of the business. My clients are not out on a W-ride of litigation.” The meeting was adjourned to a «ate to be fixed by the Official Liquidator.