LOCAL BANKRUPTCY

Auckland Star, Volume XLVI, Issue 211, 4 September 1915, Page 9

LOCAL BANKRUPTCY

AFFAIRS OF G. 8. MACKAY. DEFICIENCY OF £2.500. DISASTROUS HALF-YEAR'S TRADING •\ largely-attended meeting of tho creditors of (Jeorge Stewart Mnekay, inereer and gentlemen's outfitter, of Queen Street, Aurklnnd. m» held at the office of the Officinl Assignee (Mr. \V. S>. Fisher) yesterday afternoon. The debtor's schedule showed liabilities to unsecured creditors amounting to £2,108 11/3. To scoured creditors he owed £2,383 1/3, but the securities were only valued nt £134 13/4, so that the deficiency in regard to the secured creditors (£2,250), added to the other liabilities, made a total indebtedness of £4.418 15> :f. Assets were ostimnted to produce £1.871 18/, made up of I stock-in-trade (£1,443 6/1. book debt* of £1">:» 15 5 leetimated to produce £70), cash in hand (£5 12/1), fittings (£315 1, ) and four Auckland Building Society shares (£37). Thus there was a nominal deficiency of £'2,!>47 1/3. Reviewing the history of the business, the debtor said that he had bad fifteen years' experience of the trade, and in "I!U2, in partnership with a man named Sydney Johnson, now in England, he bought the business of Mr. Diekson, M.P., | the arrangement being that they should pay £(300 for the fittings and goodwill and take over the etock at 20/ in the £. As a result of pressure he had to cull a meeting of his creditors on Anguot 18th, an.l was asked to file, lie attributed hie failure to having paid too much for the business originally, and to the fact that since then he had suffered from the compulsory closing decision, the strike, the smallpox epidemic and the war. He wai 33 years of age, was married, and had two stepchildren. The Official Assignee explained that till , landlords of the shop had distrained for rent, and were earning en the hilainean in accordance with the provision* of. the Bankruptcy Act. HIS CAPITAL. Examined by the Assignee. Mnckny said that, the total purchase price of the business was £3.783. and the arrangement was that he and .Johnson were to put in £.->UO each. He borrowed r-apitiil to 'tart with, as he only had about £100. and about £70 of this was owing to him. His actual cash resources were about £H' i" the Post Office Bank and £14 in cash. £MX) was paid when business commenced i" \llguet, .lohiwon [laying his £2-">0 and witness borrowing £400. When the stuck was taken witness checked it over. u.J was satisfied that the valuation placed upon it was approximately near cyst price. This applied to old as well ft» new stock. What the condition of trie stock was they could not tell until they ramc to sell it. For instance, there was a larjre quantity in bond, which was bought on the invoices, and which wns found to he very bad. r-ome of the hats were in the shop now. The goodwill and fittings were put down at £700, but debtor hnd no idea of how this sum was made up. This was simply the value placed upon them by Mr. Dickson. and witness did not take any steps to ascertain the intrinsic value of the fittings. AVERAGE PROFITS. The usual procedure iv Axing selling prices was to put 30 per cent on tlie cost price, but gross profits would probably average 27$ to 30 per ceut. taking clearance sales into consideration. Much of the stock bought from Mr. Dickson was sold at a loss. Bankrupt estimated that the £.*>.ooo worth of stock he lioupht from Mr. Diekson was only worth 12/0 in the t. The accounts from year to year were audited by Mr. G. \V. Hutchison. The first year's balance sheet showed a gross profit' of 22.7*1 per cent, the second year 31.3 per cent. Th» six months ending February, 1015, realised a gross protu of 42.t>5 per cent. The Official Assignee: If Mr. Hutchison submits a balance-sheet for the next six months ending August 20th, and this shows a loss of 20.67 per cent, how do you explain it?—l can make no explanation, except that we had to sacrifice stock, ne trade was bad. We started to slaughter prices immediately after February, when the dissolution of partnership took place. On intimation of the dissolution lieing sent out. the merchants shortened their credit, and the only way to get fre.-h credit was to sell, in some cases under cost, lines ' of which we had long stocks. CLOSE TO TIIK WIND. "We always Railed close to the wind. but we were never pressed until after the dissolution," proceeded the bankrupt in reply U> questions, "and we were not seriously troubled until the last six weeks or 1 two months." Altogether some half dozen creditors had sued. When creditors began to press for a reduction of accounts he thought they were simply taking precautions on account of the war. and came to the conclusion that they were carrying too much stock, and derided to tur nit into cash to meet liabilities. He did not realise that he could not meet his liabilities until a few days before he filed his petition. His original arrangement with Mr. Diekson was to pay off £100 a month, hut this broke down when the war started, nnd the fresh arrangements also failed. but he did not think Mr. Diekson would "push"' him. He admitted that ii cheque for £100 was dishonoured, an were also 1 two smaller ones paid to Mr. Diekfion. Debtor acknowledged that he waft close- ' hauled nearly all the time he was in business, and amongst the measures he took to

■ meet accounts were the Riving of postdated cheques and requesting creditors to Rplit up hills. He had no personnl bell longings. The furniture belonged to his I wife, who possessed it before the mar- ' viage. She had a separate banking nc- ■ count, but debtor never paid anything into it beyond the exchanging of cheques to obtain grace tit the banks. She had no - private means, but he had told creditors " that she could raise money by her cxpectn--8 t-.ons under a will, but that wan strictly - in regard to paying out .Johnson, who agreed to accept £250, but had only had £50. He had not agreed to take a Mr. " Buckley, who had lent him money, into ■» partnership. - The meeting was adjourned until 10.30 a.m. on Monday, when an offer hy Mr. Dickson will be considered.