HOTELKEEPER'S BANKRUPTCY

Taranaki Daily News, Volume LII, Issue 187, 11 September 1909, Page 6

HOTELKEEPER'S BANKRUPTCY

THE OPUNAKE HOTEL. A meeting of creditors in the estate of Lancelot Black, hotclkeepcr, of Opunake. was held at the office of Mr. J. S. S. Medley, the Deputy Official Assignee, yesterday afternoon; Mr. T. S. Weston appeared for the DD.A.. and Mr. Johnstone for the bankrupt, who w.is present. The creditors attending were Messrs T. Knowles, T. C. Schnackenberg (L. D. Nathan and Co.), Watt (J. 0. Swan and Co. and Wanganui Brewery Co.), F. Ralfe (Ralfe and Archer and five other Opunake creditors) and Mullin (Opunake). The statement submitted' by the bankrupt showed estimated assets £llOB Is, and liabilities £934 3s.

Mr. Johnstone explained the circumstances leading up to the bankrupt's present position. Up to June, 1906, he had been proprietor of a hotel at Bui'?. In that month he sold out, receiving

£I2OO or thereabouts. Of that he gape £3OO to his wife in consideivjKj of her faithful assistance in the business, and about' in paying various hiul £6OO. He did again until ed the Hotel, at put in £530 of the balance some money tor from Messrs J. G. total liability to them He had previously done them at Bulls, and they «Kio security, but the bankrupt mi deftook to repay the money at the rate ol £5 per month. He scon found that he needed a great deal more money to enable him to carry on tho business properly. He spent £2OO or over in improving and renovating the property. He made default to Swan and Co., and after six, months' occupancy had to borrow £iso from his wife: He subsequetly borrowed another £l5O from W. E. Tuck, and this loan he repaid. It was by this time apparent that the business was not going to pay, so he put it in the hands of agents and brewers' tiavellers in an endeavor to get rid of it. The property was, however, not sold, for the lease would expire in 1910, and there was n°t sufficient inducement. Negotiations were hampered, too. by the terms of his agreement with Mr. Knowles, his landlord. Recently Swan and Co. amalgama'ted with another firm, and formed the Wanganui Brewery Co. They were anxious to collect their old accounts, and issued a writ against Black for the amount of various p.n's. Default was made, and, further proceedings threatening, the bankrupt had to file to protect the other creditors. He attributed bis failure to a general depression in trad?, and to the fact that the working expenses were too high, over £lB a week. The takings, of course, varied, but they were not such as would allow a reasonable profit. The list of assets and liabilities submitted by the bankrupt himself estimated a credit of £.160, and, even discounting estimated assets considerably, it was not anticipated that the creditors would lose much, if anything. Mr. Watt said that with all due deference to his legal friend, he thought the bankrupt should have followed th> • prescribed and usual form of drawing ! out a statement showing the "wherefores and whereases" of his position. That had not been done, and the statement by the bankrupt's solicitor was of no real value. Mr. Johnstone said that as Mr. Watt was deferring to his views, he would like to point out that the bankrupt was under no legal liability to present such a statement. He was quite willing to do so, however, and would have done had he had time. The D.O.A. said he intended to put the bankrupt on oath, for there was insufficient evidence of his dealings. They bad a book showing the takings, but there was no record of the expenditure, except the bank-book. The bankrupt wa6 examined on oath. He stated that his total capital when he went in to the hotel, including the £350 from Swan and Co., was £SOO. The purchase price for the goodwill of the lease was £725. There was no furniture in the house them. The takings at first averaged about £4O, ranging from £35 15s to £54 Us. Then they fell off. From January Ist, 1900, to August 31st last the takings ranged from £l7 15s fid to £33 17s fid, averaging rather less than £29 a week. The average takings for the past three months were under £23 a week. The total takings from January to the end of August were £OB3 13s 3d. The bank, book showed that during that time lie had paid in £ll6O lis 6d, or £177 more than his total takings. Mr. Watt: How do you account for that? Where did that£l77 come from? If that is a correct record, how do you account for the fact that you banked £177 more than your cash-book shows you received? The bankrupt said his figures were correct, and were entered night by night. He had banked the proceeds of a sale of some cows, and an amount won in a Tattersall's sweep. To Mr. Medley: The average receipts were not £56 a week; hardly half that. The D.O.A. produced a couple of letters written by the bankrupt, and pointed out that in one of them he had informed Swan and Co. (who were to try to sell the hotel for him) that his average takings were £55 or £56 a week. Bankrupt said there was nothing very remarkable about that. Every hotelkeeper endeavoring to sell his house gave similarlv cxaggrated figures. He admitted having forwarded similar "particulars" to Mr. Major as his agent for the disposal of the house. Continuing under the D.OA.'s examination, the bankrupt stated that he had given no money to his wife before he filed, and that he had disclosed the whole of his assets. He had kept no books other than that produced. His rent was £8 a week, license 15s 4d. insurance £l, Tates 10s, w ear and tear £l, staff £5 10s, lighting and fuel £l' ss; about £lB a week. His personal and family expenses should not be more than £2 a week, and those were paid by cheque. The butcher and baker were paid cash out of the till, and occasionally other small amounts. He had no expectation of inheriting any money or property. Mr. Watt cross-examined Hie bankrupt at some length concerning the details of a conversation between them recently at Wanganui. Bankrupt admitted having informed Mr. Watt that thWe was no hope of his meeting a bill of Swan and Co.'s as he had to pay £lll rent, but he had not implied that he had been saving that money. Mr. Watt contended that he had been led to believe the rent-money was in the bank. As a matter of fact, the rent wasn't paid at all. Bankrupt: I said "there's no chance for you to get it. Come and have a drink." And they had one. In answer to Mr. Schnackenberg, the bankrupt said he bad kept no account of payments in cash out of the till, but those payments would be five or sixshillings a day. It was quite impossible for him to pay working expenses out of the receipts. He had had to borro-,v money repeatedly from his principal creditor to keep him going. To Mr. Ralfe: It was hardly possible to make the house pay on £4O a week. He couldn't say what his liquors and general stock cost him, and he did jot know the margin of profit. . An irregular discussion took place concerning what were actual working expenses, Mr. Watt contending that tli-? licensee should be content with drawing his board and lodging, etc., out of the business, and Mr. Ralfe espousing the claims of the licensee to have some cash return for his time.

Bankrupt (facetiously): Well, I have not teen eating much this last three days; so it won't cost much. Mr. Watt: You should cat less, and then you'd drink more; eat more, and drink less. The bankrupt: I notice you tried- to tempt me to-day, but I wasn't having any. The D.O.A. asked the meeting to decide what to do with the business; whether to carry on the hotel until the expiry of the lease, or to sell it by auction. The bankrupt had had an offer from Mr. Major, and that might ati'l hold good. Mr. Mullin was of opinion that the house could be made to pay, and Hi takings increased to between £4O and £SO a week. Mr. Watt said that the creditors' duty was to find the quickest and most profitable way of realising the property.

He made an offer to take it over nsxt day lor so much cash, stock at valuation. He considered tliat the bankrupt's value of the furniture was a fair price to pay, for there was no goodwill in a nine'months' lease, lie objected to anv suggestion of carrying on the busiest for the creditors, bis experience be i7i« that when a man was put in charge of°a hotel it was "no good to the other fellow." In discussing the offer, it was mentioned that the rent at first payable was £i>- It had been reduced to £B, with the proviso that if be sold he would have to pay the difference between £8 and £9 a week during Ms term of occupancy, and the incoming man must pay the' £0 a week also. Mr. Knowlcs intimated his intention of claiming the difference in the event of sale by the creditors, or if they earned on the house. Change of tenancy entitled him to chaTge the amount. Mr. Johnstone said that the D.O.A. could disclaim the lease. Mr. Watt: Then the landlord would have'to take over and sell the furniture at valuation or by public auction. How would he like that'! Mr. Watt said he would repeat his offer and tight Mr. Kuowles, if necessary, in the courts. He urged that the meeting could accept his oiler if they were unanimous.

Counsel was of different opinion, pointing out that the majority of creditors 'were unrepresented and that sale by private treaty was possible only when auction and tender had failed. The D.0.A., acting on this advice, said he did not feel justified in. accepting the offer. Mr. Schnackenberg moved that he D.OA. be requested to call tenders for the sale of the estate, and that be be authorised to complete the sale at such time and upon such terms as he may decide.

Mr. Mullin, seconded. Mr. Ralfe moved an amendment that the reserve be £SOO. He seconded f he amendment by one of his proxies. The amendment was incorporated in the motion.

Mr. Watt moved (on behalf of J. G. Swan and Co.) that the Assignee accept the offer of cash for the goodwill and furniture of the Opunake Hotel, stock to be taken, at valuation. He seconded the motion on behalf of the Wanganui Brewery Co. Mr. Weston, asked for an opinion, ad vised that the D.O.A. could not accpt this amendment, or the offer. He could do so at his own Tisk, of course.

The motion was carried. The meeting then adjourned.