DRAPER’S FAILURE.

Taranaki Daily News, 23 August 1922, Page 7

DRAPER’S FAILURE.

DEFICIT OVER £4500A. E. WAUGH, OF KAPONGA. | PROCEEDINGS ADJOURNED. A deficiency of £4557 Is 7d was shown in the statement of Arthur Eley Waugh, draper, Kaponga, who was recently adjudicated bankrupt. The total amounts owing to creditors (details of which have already been published), all unsecured, were £9587 7s 2d, whilst the assets were sfet down at £5030 5s 7d. A meeting of creditors was held at the office of the D.O.A. (Mr. J. S. Medley), New Plymouth, yesterday, when seven creditors were represented. The D.O.A. presided, and after a short discussion, during which an attempt was made to have the bankruptcy proceedings transferred to Auckland, the D.O.A. refused to accept a motion to this effect,’on the grounds that bankrupt had been trading in Taranaki and that the transfer of proceedings in such a case was never contemplated by the Act. Bankrupt, in his statement, said: .“In 1912 I started at Kaponga under an arrangement with Mr. C. Spence, draper, Hawera. In February, 1917. I took over Mr. Spence’s interest in the Kaponga business, and I completed my payments with him in September, 1919. Owing to certain creditors’ demands for payment, and being unable to meet various payments when due, I approached my largest creditors, who advised me to take stock immediately in order to ascertain my position. I took stock and found the result unsatisfactory, and, on communicating the position to my creditors, they instructed me to file. I attribute my present position to a slump in trade during the past year, and to the fact that I opened branches at Eltham and later at Inglewood and Manaia, and these were unprofitable ventures.” POSITION INVESTIGATED. Mr. J. D. Sole reported that, as instructed by the D.0.A., he went to Kaponga on August 14 to investigate the estate, and after making certain inquiries, placed Mr. Williams in charge of the business. Mr. Williams was a very reliable man and thoroughly trustworthy. Mr. Sole had given instructions to immediately close the Manaia branch, and remove the stock to Kaponga. This had been done. Instructions had also been given for the st'oek to be taken, and it was hoped to have the stock sheets completed in time for the meeting that day. On inspection the stock was found to be a fairly clean one, although somewhat unassorted. An examination of bankrupt’s books was made in an endeavor to ascertain the cause of bankruptcy. On August 19. 1921, the bankrupt showed a balance of assets over liabilities of £3445 8s lOd. On July 8 1922. the position disclosed in his balance-sheet showed a loss of £4646 7s 7d on the eleven months’ trading. The sales from the various branches were: Kaponga £7348 8s 3d, Eltham £10.303 6s 6d. Inglewood £1996 14s lid. Manaia £842 0s 6d, total £20,490 10s 2d. The expenses as disclosed amounted to £2737 17s 2d and his purchases for the same period amounted to £23,387 2s 7d.

The bankrupt had apparently drawn as salary £6 10s per week, in addition to which his persona] drawings from August, 1921, to July, 1922. amounted to £lO4 Bs. The bankrupt had not included any furniture and effects in his statement of assets submitted to the D.O.A. Mr. Sole had casually inspected the furniture and effects, which he assessed at £l5O, including a piano insured for £75. The whole of the furniture and effects were insured in the name of the bankrupt for the sum of £350. The bankrupt had apparently paid all his wages and petty disbursements from cash takings, and not by cheque. On looking through the chequebook it was found there were a large number of cheque blocks not filled in, v/hile some of the blocks referred to his private account, so, apparently, the bankrupt used the same cheque-book in operating on his bank account. Further. his cashbook showed an entry on August 19. 1921, transferred to Eltham branch and showing as cash balance in the Eltham bank on the same date, £l4l 4s.

Tn connection with the Kaponga business there was a lease with" four years to run from June at £9 15s per calendar month, plus rates, taxes and insurance—approximately £2O per year. This was considered a low rental and the goodwill of the lease should be of some yalue. The Eltham lease and the house lease were considered of no value. In the Eltham branch were fittings, etc., to the value of £l2B. which it was suggested should 'be removed to the Kaponga branch. The bankrupt had as-

sured Mr. Sole that, with the exception of the piano, the more valuable portion of the furniture belonged to Mrs. Waugh. Mr. Sole concluded: “I have been unable to detect where the loss has been made, as there is no record of the amount of stock sent to each 'branch.” UNUSUAL APPLICATION. Mr. Cook moved a resolution on behalf of Bing, Harris and Co. that the bankruptcy proceedings be transferred to Auckland for the convenience of creditors. Mr. R. T. McQuade, on behalf of Macky, Logan and Caldwell, Ltd., seconded. The D.O.A, said: “On an important matter of this nature I desire, in ruling my non-acceptance of the resolution, to state that the proposal is unusual and was never contemplated by the Act, and it is doubtful whether the Act authorises the transfer. Never before, to my knowledge, has such a course 'been taken in New Zealand. The position is that the bankrupt has done all his trading in Taranaki, and as it appears that his‘dealings require investigation and enquiry. it seems far better that this should be done here instead of 200 miles away. If you disapprove of my ruling you have your remedy by applying to the Supreme Court for a mandamus, but as I see matters I do not feel justified in agreeing to accept the motion. I take this attitude, however, not on personal grounds, but on the grounds of public welfare, and' that it is a matter that should be decided by the Supreme Court.”

The mover and seconder of the motion intimated that they would certainly appeal against the ruling. Mr. Freeman said he would oppose any transfer of the proceedings on the grounds of unfairness to the bankrupt. In order to give the objectors time to communicate with their principals, proceedings were adjourned for one week, cn the motion of Mr. Smith (Archibald Clarke and Sons, Ltd.), seconded by Mr. McQuade (Macky, Logan, Caldwell, Ltd.).