AN ASSIGNED ESTATE.

Auckland Star, Volume XX, Issue 57, 8 March 1889, Page 4

AN ASSIGNED ESTATE.

MEETING OF JX H. McKENZIE'S

CREDITORS.

HOW THE MONEY GOES,

A meeting of creditors in the assigned estate of Captain D. H. McKenzie, shipowner and merchant, was held at the store in Fort-streefc yesterday afternoon. There were about thirty creditors present. Some difficulty was experienced in obtaining- a chairman, Mr A. Heather > Mr A. E. Devore, Mr John Reid, Captain McGregor, and others declining, for various reasons, to occupy that position. Mr Malcolm McGregor (solicitor) said he would explain why this meeting had been called. Ho represented Mr Kenneth McGregors of Whangarei Heads, who was a creditor for a large amount in D. H. McKenzie'a estate. His client was not present at any meeting at which it wa.3 arranged to assign the estate to trustees, but he was intimately acquainted with the position of the debtor, and knew that he was the owner of various large properties, that there were assets amounting to a very large sum of money, wholly unencumbered, and out of which there should be a substantial dividend to the creditors. In these conclusions his client was supported by expressions of opinion from different creditors who were at tha present meeting. The most sanguine of them expected tho estate to realise 15s in the £, and the less hopeful anticipated that about 10s in the £ would bo realised. If the trustees had, as he considered, acted in a proper, honourable manner, and fully discharged their trust, his client would have fceen quite willing to sign tbo deed of assignment, and bo concur in their acts.

Mr S. Hesketh who appeared on behalf of the trustees (Messrs John Buchanan, William Johnston and K. 0. Young) here suggested that proceedings would be more orderly if a chairman were appointed. Mr C. Wood then consented to preside, and \Vas elected chairman unanimously. Mr McGregor proceeded. He said the first intimation he received of what the trustees were doing was by circular sent to him in February, 1888. In the circular the trustees lamented that certain statements supplied to them had been found to bo incomplete and erroneous, and stated that the liabilities had largely increased; and the assets diminished, and that having regard to the large excess of preferential claims, they could not hold out a hope of realising more than 2s or 2a 6d in the £. On the next visit of his client to Auckland he requested him (Mr McGregor) to make inquiry as to what the trustees were doing, and as to what return the creditors were likely to get out of the estate, lie accordingly waited upon the solicitors for the trustees, Messrs Met-keth and Richmond, and was supplied by them with some information of a very general chaiactev. He pressed for a further statement, but it was not till a few weeks ago that the statement was prepared and he received a copy oi it. On perusal of the statement, tho results appeared so extraordinary thab he (Mr McGregor) wrote to the trustees asking them to convene a meeting of creditors for the explanation of certain matters. Tho trustees declined to do so, on the score of expense. Mr Hesketh asked that the reply should be read.

' Mr McGregor read the reply received from Messrs Hesketh and Richmond. In this letter the trustees said that they did not feel justified in acceding to the request of one creditor to call a meeting, but they were quite willing to give effect to a similar request if ib were made by a lar^e number of creditors. It was further stated thab a comparatively short time would see the whole of the estate wound up. To call a meeting of creditors then, they considered, would involve needless expense. His client, Mr McGregor proceeded to say, had not executed a deed of assignment, and had never been consulted, although he waa known to be a creditor. After seeing tho statement referred to, they considered it expedient to call this meet-

ing. Mr Hesketh said he had a suggestion to make on behalf of the trustees. They had that day an informal meeting, and it was not attended by the large body of the shareholders. There were certain creditors who had never received intimation of that meeting, and it would be patent to everybody present that creditors who were away from New Zealand could nob have been invited, neither could those creditors in the South. Any discussion at this meeting must be abortive. If they wished to discuss the trustees' actions at all they should have a full meeting, wheie a large majority of creditors were represented, and where they could give eifecb to any conclusions arrived at. Therefore he suggested that the better plan would be that "they should allow the whole matter to stand over until a date to be fixed by the trustees, when they would be prepared to hand over a dividend out of the estate, together with a statement of accounts as to how they had dealt with it. On behalf of the trustees, he was quite prepared to say that this would be done. The trustees courted the fullest possible investigation into auy of their transactions, and. would give any information in their power to the creditors. In fact, they had always been ready and willing to do so. He suggested that a general meeting should be called for the 21st May.

Mr A. E. Devore: Why that date ? Mr Hesketh : Because the trustees told me thab^they thought they would be able to close up the whole matter by that date. There are a number of shares in hand, and at present practically unsaleable. In a month's time they might be able to realiae upon them. Mr McGregor : It is pretty evident that they wont bo, as you will see by the figures to be submitted to you. As far as regards tho meeting of creditors, he was certain there would never be a fuller meeting than at present. The trustees were acting wholly and entirely without authority. They had no right to meddle with the estate, for they were acting under a deed not signed by a good many of the creditors. This meeting had been summoned to discuss a statemenb of accounts submitted by the trustees for their perusal.

Mr Hesketh : You aie under a misapprehension in saying that the trustees are not authorised. The creditors who have signed the deed are bound .by it, and have no intention, so far a3 I know, to repudiate their responsibility. The Chairman said he thought Mr Hesketh's suggestion wholly uncalled for. It came quite within the province, of the meeting to say, from the iaformation they had received, whether or not the trustees were acting to their satisfaction. Judging from tha documents placed in his own possession during the last few days, he thoughts it was high time that the creditors raised their voices against such action as the trustees were taking. He never saw or heard of a case that deserved more censure than this did on the part of the trustees. (Hear, hear.) Ho was not present at the first meeting of creditors, and he was not requested to attend the present meeting. This deed was never shown to him, although £10 were paid for getting signatures to it. They should ascertain where this vuoney had gone, and if the creditors were satisfied with the action of the trustees, he would be prepared to ?ive the whole thing over to them and say, " Swallow the lot." From the documents ho had in his possession, he found what the trustees had taken out of the estate as commission, and the charges, as far as he could see, had been very excessive. Burther than this, he thought that the trustees were very blameworthy.

Mr Hesketh moved, " That the trustees be requested to call a meeting for the 21st of. April, and to. iurnish creditora. with a

statement of accounts a week previously." Mi' Heather gaiti Hq \va3 .somewhat in sympathy ..with Mr Heskebii, and suggested that he should go a little further, and direct the trustees to call the creditors together on the 2lst of April. They need not mind about the sharea that were in hand. Let them account for what they had done. They should also put in the hands, of the creditors, a week before the meeting, a statement of what had been done with the view of realising the asaets. They could then discuss the situation fairly, but it would not be very courteous, whatever their feelings might be against the trustees, to discuss their acts without giving them an opportunity of being; heard in defence, lie seconded the motion.

Mr McGregor here,

They were invited to be

Mr Heather said he represented the Agricultural Company, which was in liquidation, and had received no intimation of the meeting. Mr HesUeth said he had no objection to the meeting being fixed for the 21at April, but he thought that were the extended time granted the trustees might be able to say, "Hero is the end of it." They would also be quite willing to furnish any accounts or information. -.

The Chairman said he questioned whether the trustees would attend.

Mr Hesketh observed that the Chairman had no right to make such a remark.

The Chairman : Well, I have a reason for saying it.

Mr McGregor moved, " That the meeting proceed." lie urgod that there could be no harm in the creditors becoming acquainted with the results of the trustees' transactions. There had been a full and complete statement prepared by the trustees, and it was now' before them. There was really nothing further that could be realised in the estate, except a piece of land at Whangarei under agreement for sale for £20, a certain interestin theManaia bash, the value of which was not known, shares in the Miranda Uoal Company, Kaihu Valley Railway, and others absolutely worthless, a steam launch, and other small items, which were not likely to be realised on for some time.

Mr Mennie seconded the amendment. Tho question was put when 12 voted for the amendment and 10 for the motion.

The Chairman declared the amendment carried.

Mr Hesketh : Do you decide according to numbers '!

The Chairman : As this is nob a vital matter, I think wo can go on. Mr Hesketh protested that the large shareholders should have more weight than those who held but few shares, but the Chairman adhered to his decision.

Mr McGregor again urged that it was the duty of the trustees to have been present.

Mr Hesketh replied that they would not have been justified in attending an informal meeting called by ono creditor, The fact remained that they were not there, and there were many other creditors absent. It would be absolutely unfair to bhe trustees to attempt to investigate these affairs now. The Chairman : I rule that the meeting proceed to business.

Mr McGregor said that in the statement of accounts prepared by the trustees, some very extraordinary revelations appeared. They could gather from these accounts that the nominal unencumbered assets referred to by the trustees in their circular of the 24th February, 1888, which they said they felt fully justified, after consideration, valuing at £8,817 10s ; then they dwindled downto£4,Bß7lßi-10d These were unencumbered assets, and they were charged with certain payments amounting to about £1,000. These assets, they would have thought, would be divisible among the creditors, but to their surprise they found the balance of the estate to be the sum of £265. Those items not accounted for consisted of worthless shares, and other small items, which did not amount to £100 in all. They would doubtless be surprised to learn how this large amount of money had gone. Some of the claims were startling. ITirst there were the liquidators' expenses, made up as follows :-Legal expenses, £124 13s ; clerical expenses, £170 17s 6d ; general expenses, £223 2s od ; auctioneer's commission, £274 17s ; advertising, £135 10s ; making a total of £928 19s lid. Next followed trustees' commission, which way set down at £360 os 6d, so that in order to realise for the benefit of the creditors £265 6s 6d, the trustees, had expended £1,790, There was a startling 'fact for them. He characterised in very strong terms the manner in which the estate had been administered. No trustee had a right to act as these trustees had acted. They had taken over the unencumbered property of the estate. He believed they had gone to the different mortgagees and said, "We will take these properties over, and undertake to pay you off your charges." The result of this was that all the properties realised was £12, and on thorn was an incumbrance of £16,000 or £17,000. The trustees, of course, paid to these preferential creditors the balance between the £12,000 and the £16,000 odd, when they had no reason to do so. They had also made other payments that were astonishing. They had paid forehares in the Miranda Coal Company £250 for arrears of calls, and these shares were absolutely unsaleable. There were also shares in the Kaihu Valley Railway, and " Leader " newspaper. The statement of their preferential payments waa a moat interesting one, and when the creditors did geb the accounts they would well repay perusal. Referring to the £860, it was very entertaining to see how the trnstees paid themselves. The estate was assigned on the 27th August, 1887. Exactly one month later each of the trustees drew £50 for himself, and on the 31st October, a little over another month, having elapsed, they drew £75 each. The whole of their commission was on the 10th of April, 1888, drawn out of the estate, although they, told tho creditors that the estate wa3 not yet realised. He presumed that it was so that they could do away with the small balance of £265, now divisible amongst the creditors. There was one prominent object sticking out in the actions of the trustees: they were greedy for selfish gain. Even on the payments they made for preferential claims' they claimed commission. None of them could have the slightest doubt that if this estate had been placed in the hands of other trustees a very satisfactory return would have resulted so far as the creditors were concerned. As it was, tke estate had been frittered away, and the proceeds scattered broadcast. Of course, they were not bound, nor were any of the creditors bound, by the acts of these trustees, and they were not going to allow such a state of affairs to rest without bringing the trustees to account, and to a substantial reckoning. The Chairman said now that the creditors had heard a statement of the expenditure in the estate they would know whether it had been wisely handled or nofe. Perhaps some of them would express an opinion as to whether they approved of what had been done with the proceeds.

Mr Devore said he thought the creditors would like to hear what the trustees had to say before expressing an opinion. He saw only one way out of the matter. He was acting for Captain McKenzie, and the only way in which his client could be protected against creditors and trustees in the coming revelations that were threatened was to hie hia schedule. Then, if there was anything to be ascertained, it could and would be easily ascertained in bankruptcy. He could see no hope for Gaptaih McKenzie being able to get any results, or to carry on business again, unless he sought protection in bankruptcy. They had been told that some of the creditors had no 6 signed the deed, and after what had been said, it was pretty clear that some of them would never sign, and he thought the only remedy was bankruptcy. He was not prepared toad-

vise his client ab present, because be had hot seen the accounts. If the creditors decided that a meeting 5" should be held i.i three or four weeks, matters could remain as they wero till then. If they went longer than that he thought Cap.taiu McKenzie's duty was clear, and that was to put the estate into bankruptcy, where full inquiry could be made as to the truth of the charges now made. Mr Hesketh: Make it as short a period as you can. Mr Devore «aid he thought a fortnight was long enough. The statement of accounts seemed to be pretty conclusive.

Mr Heskebh said the trustees were quite prepared to attend a meeting at the request of any proper number of creditors. Mr Hesketh moved,- " That a meeting be held on the 21st March, and that a statement of accounts be placed in the hands of every creditor three days previously." Mr Ross seconded the motion, which was carried.

Proceedings terminated with a vote of thanka to the Chairman.