LOAN AND MERCANTILE.

Temuka Leader, Issue 2647, 17 April 1894, Page 4

LOAN AND MERCANTILE.

London, April 12. The examination of the directors of the Loan Company was resumed to-day. Sir Edward Stafford said that at the meetings of the Board of Directors moat exciting discussions had taken place repardiug the reports furnished by Mr Falconer Larkworthy and Mr David Elder. He (Sir Edward) admitted that one third of the sum divided in 1892 was composed of unearned interest which had been placed to the credit of the profit and loss account. He also admitted that he had failed in his duty as a director in not enquiring into certain items in the balance-sheet. The holders of. unconverted debentures in the New Zealand Loan & Mercantile Agency Company claim priority, or equality with converters, on the grounds that the old prospectus gave security. Justice Williams held that it was clear that the reconstruction scheme was drawn on the basis of the right of holders of Baron Schroeder’a debentures to have the whole of the unpaid capital appropriated for their benefit, but in . the event of failure this right was very much open to argument, and he required evidence that the creditors were aware of the facts when they assented to the scheme. He also wanted an assurance from holders of Schroeder’s debenture* that they would grant a further concession, if such was requisite, without compelling him to act. His Honor hinted that he might bring pressure to bear in the matter, as he recognised the necessity of disposing of the reconstruction scheme without delay, or it would be a failure. The liquidators stated that there was plenty of floating capital when the company was restored. The discussion on the scheme was adjourned till Friday. April 13.

Regarding the New Zealand Loan & Mercantile Agency Company, it is doubtful whether Baron Schroeder will make any concession. Sir Edward Stafford, in bis examination, said that he had strongly objected to the security given to Baron Schroeder, and admitted that Mr Larkworthy had warned the board against dealing with the Waikato lauds. He added that ninetenths of the present lock up of capital originated with the colonial boards. Sir Edward Stafford, in his evidence, said that he had objected to the bondholders of 1892 receiving preference, and that he understood that the others were afterwards placed on an equality. He regarded Mr Larkworthy’s reports as historical romances.

The Judge said it was hard to believe that Sir Edward Stafford had forgotten the company’s manipulation of its accounts.

Sir George Russell, one of the directors admitted full responsibility, but said that he was unaware of many incidents in connection with the affairs of the company. April 14.

Counsel representing the creditors’ committee of the New Zealand Loan & Mercantile Agency Company, informed the Court to-day that it was impossible to extort further concessions from Baron Schroeder.

The Judge accepted the position with regret, and admitted that there was no power to alter the reconstruction scheme with regard to the security. The sanction of the Court, however, would not affect the liability of the directors and officers of the. company in the event of proceedings being taken. His Honor eventually sanctioned the scheme. Ho said that he sanctioned the Loan & Mercantile Company’s reconstruction scheme, believing that the company would be successful in the future if those personally interested would cordially support tho scheme. He was not satisfied that the scheme treated the unconverted debenture-holders with injustice. He recognised that the holders of the sixth issue had been deprived of their rights of priority, but not sufficiently to justify a refusal of the scheme. Sir John Gorst stated that he had not noticed any irregularities in the report of 1892, and he accepted responsibility. He admitted that Mr Thomas Russell was unable to meet his liability at the time of the transfer of shares; as he was hopelessly insolvent. The new directors of the company include Mr Martin, of Turnbull, Martin, & Co., Mr John Beaumont, formerly of Christchurch, and Mr S, W. Oswald, The directors intend to increase the frozen meet business, and advocate a scheme of immigration of farmers with small capital. It is expected that they will apply the pruning knife to the encumbered properties. At Court to-day, Sir John Gorst said that it was extemely wrong for the New Zealand Loan & Mercantile Agency Company to insert in the profit and loss account of 1892 a portion of the suspense fund also interest which was not earned. Justice Sir R. V. Williams, in referring to the caution displayed by Sir Edward Stafford, said that he had evidently made commercial euphemism a fine art. Sir George Russell admitted that the directors had been neglectful personally. The Court has adjourned until Thursday. Melbourne, April 14. Mr David Elder, general manager of the New Zealand Loan & Mercantile Agency Company in Australia, writes to the Press reminding bis friends that the Court at present sitting in London is not yet in possession of all the facts of the paso, and asks them to suspend judgment in matters where his name is mentioned until the examination is concluded. He says that if necessary he can make such an explanation as will show the real facts and can justify every one of his actions that have been called into question by the Court. Auckland, April 14. The general manager of the Loan & Mercantile Agency Company has received a cablegram confirming the nows in the cablegram published by the Press Association respecting the reconstruction of the compan3 r being sanctioned'by Justice Sir R. V. Williams. Tho speedy incorporation of the new company will now follow, together with the resumption of business at a reasonably early date.