HIT BY THE SLUMP.

Taranaki Daily News, 16 December 1922, Page 6

HIT BY THE SLUMP.

GARAGE PROPRIETOR’S FAILURE. ESTATE OF C. R. WILSON. The voluntary liquidation of his motor company, a threat to execute judgment, and a demand by the bank under an overdraft guarantee are 1 main reasons to which Cyril Louis Wilson, garage proprietor, Eltham, attributes nis bankruptcy. The statement of assets and liabilities shows unsecured creditors totalling £3554 3s Id and secured creditors, £1450, other liabilities to the extent of £ 107 0s lOd, bringing the total indebtedness to £5lll 3s lid. The assets shown are furniture £125 and an eignt roomed house and a quarter acre section in Eltham valued at £l5OO, a total of £1025, leaving a nett deficiency of £3456 3s lid. The unsecured creditors are Wilson’s Motor Supplies, Lio., Eltham, £3447 3s 6d, (liability on uncalled and unpaid share capital) N. Z. Bacon and Meat Packing Company, £9l 2s 6d; Dr. Boyd, Eltham, £l2 10s; E. W. Mills, £3 7s Id. The secured creditors are J. Best, £BOO, M. Peebles, £350; and M. McGuire, £3OO, all of Eltham and who hold first, second and third mortgages respectively on the house. The other liabilities are £32 12s 7d due to the Eltham Borough Council for rates on the house and the sums of £5O 12s lid, £l4 Us 3d, and £9 4s Id due to Best, Peebles, and McGuire respectively for interest due under their mortgages. A BIG TURNOVER.

“I commenced business as a motor trader in April 1919 with a capital of about £l5OO representing my savings for the previous fourteen years, in premises owned by Mr. C. A. Wilkinson who assisted me in the purchase of the stock and plant that I took over from him at the time,” says Wilson’s written statement to the D.G.A. “I acquired several good agencies and spent a lot of money in developing |he business, installing plant and in improvements to tiie building. The business grew very rapidly, the turnover for the 12 months ending September 1920 being £45,600 and for the 12 mouths ending September 1921 £65,650. The business being done was far too great for the capital to handle it, and, in November 1920, I commenced to form the business into a limited liability company. The company was incorporated in January 1921, hut,’ owing to the trade and financial slump just then beginning to make itself felt, I was unable to get in over £lO,OOO further capital which I had expected to get. and which, if it had been obtained, would have put an entirely different complexion on the company’s affairs. Business right from the inception of the company was not good although the first 12- months of its operations it showed a good profit. EFFECTS OF SLUMP. “At the time of forming the company,” the statement continued, “and before we were fully aware of the possibilities of\he slump, we became committed to a branch of the business at Wanganui which, through lack of capital, was not a success and which eventually cost the company about £3OOO. About a year ago it was decided to raise a debenture issue' of £4OOO and, after long negotiations, this was done, but it was not of material benefit to the company as most of the money so raised was in the form of stock taken oyer which, in turn, had to be sold to bring in actual money. The continual drop in prices all round, lack of sales, difficulty in reducing expenses, cars sold coining back to us, bad debts,' and, in some cases, long terms of credit in order to make sales, eventually resulted in a decision, after the last balance sheet, to put the company into voluntary • liquidation, which was done early last month.

“The whole of my assets, consisting of £55110 was put into the company in the form of paid up capital and I have no other resources other than what I had in the company. I took and became liable for a. further £3OOO in shares which were to be paid for out of my earnings in the company and, in addition,. I became one of the guarantors for the bank overdraft. The N.Z. Meat Packing and Bacon Company recently obtained a judgment against me for £9l l‘2s 6s for mechanical work done prior to forming the business into a company, and it was in consequence of their intention to execute the judgment and the bank’s demand under the overdraft guarantee, that I decided that the only thing to do foi the protection of the company’s claim against me for unpaid share capital was to file my petition. Apart from the share liability and the Bacon Company judgment, there is practically nothing that I owe, but as I expect that I will have lost the whole of mv capital in the company, I regret I have no assets from which I can make an offer to my creditors.” Wilson will meet his creditors at the office of the D.O.A. (Mr. J. S. S. Medley) next Wednesday.