A BUILDER’S DIFFICULTIES.

Taranaki Daily News, 8 November 1921, Page 7

A BUILDER’S DIFFICULTIES.

UNPROFITABLE WORK. A HAWERA BANKRUPTCY. A meeting of creditors in the estate of Sam Lockhart, builder, of Hawera, who was adjudged bankrupt on the petition of the creditors, was held in Hawera last week. The following statement was put in by the bankrupt:—l commenced business as a builder in Hawera in 1914 with very little capital. Work increased, and at the end of about six months I employed two or three carpenters. Business improved, and about 1918 1 was employing about sixty to seventy men. I was then solvent. About that time I bought machinery at a cost of £2500 with the object of carrying on joinery works. I bought stocks of timber for this class of work, but it was not a successful venture. and 1 eventually sold the machinery at a loss of about £lOOO in January of this year. In the meantime I had carried out various contracts, some of which paid quite well. Some of the contracts returned only a small profit, and one, the Electric Light Co.’s building, resulted in a substantial loss of about £BOO. The profits, generally speaking, had not been commensurate with the amount of work done. At the end of last year I commenced to build a house at Stratford, where I proposed to live. This was intended to cost £2500 to £3OOO- - did not then feel that my position was insecure. There were then several contracts in course of completion, which I estimated would yield a much greater profit than eventually turned out to be the case. In the beginning of this year I began to feel the pinch, and as the joinery machinery was not paying I decided to sell it. Apart from the contracts which I carried out on a 10 per cent, basis of profit, none of the contracts since 1918 had paid anything like as much as they should have done. This applies particularly to contracts in course of completion in 1920. In several contracts, moreover, there were increases in the cost of materials after the contracts were signed. While the Stratford house was in course of construction 1 saw that I could not pay my debts unless the place was sold. I therefore decided to sell it after completion, and expected to receive a price of about £3500 to £4OOO. The actual cost of the building and land was £3700 or thereabouts. I anticipated that I would get from £l5OO to £2OOO out of the place. Then the Farmers’ Co-op. Society threatened me with litigation in respect of their account, and I gave them a second mortgage over the property for the amount owing to them. After that other creditors began to press, and eventually the Commercial Agency, Ltd., demanded that I should assign my estate to it or they would commence bankruptcy proceedings. I lost a little money in making investments in the “boom” period. I paid £490 into the Farmers’ Co-op. for shares. I bought vacant land in Union Street for building purposes, and have paid as part purchase money, stamp duty, interest, etc., between £BOO and £9OO- This expenditure has not returned anything, although it represents an expenditure of capital amounting to about £l3OO. During the years 1919 and 1920 I went back in my business instead of going forward. I attribute my position to the gradual loss of capital, increase in cost of materials and wages, and eventually the loss on machinery and the expenditure on the Stratford building. The Deputy Official Assignee read a statement showing the financial position of the estate as far as he had been able to investigate the facts up to the time of the meeting. Dealing with the assets, he said the Commercial Agency Co. had realised £152 15s 6d, less £57 12s Bd, leaving a balance of £95 3s lOd. Mr. H. L. Spratt had cash in hand for the, sale of the Caledonian Street section'' amounting to £6 10s. A section in Union Street had cost £6OOO, and there was a mortgage of £5500, leaving a balance of £5OO. The value of this property as an asset was nil. There was a disputed claim on one Peterson, but the amount which the estate would benerfit from this he could not state. On the liability side the secured creditors were J. Masters £9OO, leinors £414, and Farmers’ Co-op. (mortgage) £7OO, making a total of £2014. As a set-off against these they had the amount realised on the sale of a house £l5OO, and value of shares held by the Farmers’ Co-op., making a total of £1990, which, on being deducted from the liabilities, left £24. Other liabilities were Cowper Bros., interest £285 10s, J. R. Nairn £9B. Other secured creditors were estimated at £lOOO. There was a contingent liability of rent due to Mrs. Ridd (Wanganui). and the total deficiency was approximately £l4OO. Mr. Sage said that the disputed account with art employee named Peterson had not been shown in the assets, though probably there was a claim against Peterson. Mr. J. Masters held the first mortgage over a house valued at £l5OO. leaving a balance of £6OO, against which there was £414 due to lienors. Unfortunately there was a second mortgage with the Farmers’ Co-op., which more than covered the balance of £lB6. so that they had a very doubtful asset in this. The Farmers’ Co-op. held a mortgage for £7OO, but the estate held against that £490 in shares in the Co-op., leaving the value of the account at £2lO. Cowper Bros, were the holders of the mortgage over the Union Street property. R. Lockhart had an original claim against the estate of £ll5 10s. He estimated the unsecured creditors at £lOOO. There was a claim by Mr. J. R. Nairn for £9B, and there was rental due to Mrs. Ridd for the lease of the office part of the building in Regent Street. There was an eight years’ lease to run at £3 per week, and Mrs. Ridd was receiving the rent at the present time, which would be a set-off against any claim on the estate. The deficiency amounted to about £1570, but the figures may be altered as a result of future investigation. It was very difficult, where there were so many complications, to get at the position in a few days. The questions in regdrd to the Co-op. and Peterson would have to be gone into, and Mrs. Ridd’s claim would .also have to be investigated. The whole position would have to be gone into very thoroughly before he could say anything further. At present there was not much hope of a dividend. There was about £lOO in hand, and £ll5 was due to Nolan and Tonks on a preferential claim. After a lengthy discussion the meeting was Adjourned to enable a fuller investigation into the position to be made. — Star.