COMPANIES' DIFFICULTIES.

Auckland Star, Volume LIII, Issue 249, 20 October 1922, Page 5

COMPANIES' DIFFICULTIES.

A RELIEVING BILL HO CAUSE FOR PANIC. (By Telegraph.—Parliamentary Reporter.) WELLINGTON". Thursday. c An amendment to the Companies Act. t intended to give relief to companies n«- 1 socialecl with tn-e producing interests, i ami whk-h find themselves temporarily t in financial difficulties, vt«» put throusSi s the House to-night. The Hon. E. 1". ! Lee, Minister of Justice, in moving the 1 second leading, said that the measure ! would empower the Supreme Court in I ;oases where a company was financially , : ' pntbarraesed. and it would bo contrary l< to the interests of flip creditors as a. |' whole or any class that it should he I ' wciir.il up, lo order a meeting of credi- ! torn. It any arrangement or compra- j ' mi»e -Pfas agreetl to by a three-fourt'.is | '.majority of the c-reditora. the Court 'could then order a stay of proceedings ' > rc-bieh mi<r!it be in progress. lf*> j [elresawl the point ir.nl the wboK- pro-j iceedinge were Under tbe control "f tli.'i Court., and them was th-e safejruar.i that auy arrangement must '■">« Iby t'-iree-fourths of Ihc creditors, am! j iwfts rot binding until approved by Lii-a j 'supreme Court in tiie interests of i.ie!' creditor*, j The .Premier =,ai<l that the le.sal poei- ; tion havins; Ween explained, lie would mention the r-aeons for the bill. It !v\»B well known in New Zealaiid that j I <?»veral companies, mostly handling | j primary produce, ha.l felt tl:r slump I They were quite solvent, but owing f.o Ifi:* , hard ol the eighteen ;' months found in t-arry-i ing on. The outlook tor protlr.-ers ha I i.;..inged greatly for the hcticr. Wool j iras pining up steadily, meat, with t!ie I ) exception of beef, ivas s>>l!iujr |>artii~u-j Ittrly well, and the cost ot' production | was coming down. Theg? companies, ii i given a chants, would, lio vra* ?ar.i3tied, ret-over. 'lie did not say every one wc.uld rncover: he \v;»a not s()«akinjc of (com pa mc» which were in.so".vci;t nor was i lie specifying any particular company, j JTliere wo* a danger of a small minority jof obstinate creditors who miglit mn!;e lup their mind to force a company iiitti 'liquidation. Thie a t Ureal wiiicli {was bein , ' hrld over them, instoad •>: ! giving the companies a c'uincc to rci novel. Their only plan w 'ft* t° come to Parliament for legislation sue.i as I was c-onteir.ed in the bill under disi-in-jtion. It wan not new legislation, as it j j I.ad been in operation in New >';nitii 1 Walfen ar.d Victoria. j Mr. Witford: It was repcali-d. Mr. Massey agrerd, stating tiia: this I wa.» beeauce it wae no longer required. j frobalily thin bill would not be .quired 1 ionjter than 12 month*, "lien maUer* ifouW take Iheir ordinary course- "'' [don't want to create a pnn'.o. and nothing j in the way of panic in involve!." continued t:i*'Premier, but there is a S 1 ""' i deal of anxiety on the i«ut of a certain ! section that i.U«Mi> companies be .1 chance to recover t'lenwelves now prices are belter, and i.'ae cxpt-ri-|enc« til*)" have g»ineJ. Men ligve jpain.-<l ' ("xperieTfp during the las! 12 months I which would be" exuseeHnjrty uiietul to J them foi the rest of their lives. He add*<l that notUinx could lye done without the consent of the Supreme Court, and il" it «»id » company must be ttouiiJ pip it must fact? the music. ! Mr. Wilford: Tiiat i« not what the j Mr. '•M«-»cy n-pli.Ht tliat ii «a» in- ■ tended to safeguard the interesti »i the i *barcbolders >r> far ,i« die Court j-ouM-jflo it. He was not goins to say that j de»t«irjte diacasrs requtired dp«perat« | IreniVdlrs; h<- uotild not nay tlvat ttie ipOB-ition wus bul ii »•»• j 'c'llt- and n-a« causing anx'i-(v in oiii- i>l ( j two, perhaps tlirei , . t»>»ee in Now Z<^a- ■ lanti. ' .SO?.IF. VI;F..vT[()NS AS*KEU. Mr. Wilford stated that the bill did no* the Court to wind up a coir.- , j puny, nor diil it nay that the interests lof ihareholdvrs and creditors muHt be! I>iir»mount. The Court nisy decile, it on public interest. Mr. Maeeey: Exactly. J Mr. Wilford asked wiiat was to 1 become of the people who had deposits with such <*nnpanic*(. Ho. remembered flaring advertisement!" offering 8 per I cent to tho»c who would deposit money ! with them. What would these people i get« Would it be t/ in the pound . Mr. Massey remarked that if a. coni- ! pauy could only pay -1/ in the pound | i It should lje wound up. I Mr. Wiiforrf added that he would go , a Jong way to preserve stability, because j .it would lie disastrous i! iuotitutions , !in which the public lmd confidence were i ;to be destroyed, but it was bis duty to j j fiamine bow far such legislation would I go. He favoured narrowing tbe scope i jo* fhe clause to provide that tbe only! j consideration for authorising a compro-1 1 mi«e should he the interests of share-' i holders and creditors. The Court should ! not be allowed to ignore these factors on tbe ground of public interest. •'I don't wish to create alarm, but 1 I think this bill does not <ro far enough." .' said Mr. MeCalhim, who suggested that !it <ie\e an opening to any refractory j creditor to defame a company. Hr knew j the bill wns justified, though Sic would not give delsiie of cases which be knew] ■about: it would help certain companies i j whose operations benefited producers.! I There should be a limit to its operation. ! i Mr. Maasey: Ono year will be enough, i ; . Sir -lehn l'.uke askeri if Ihc overdraitj i would be eubjec-t to the aam? provisionaj j »s the creditor?. | j Mr. Lee replied in tlie allirmathe. j j Mr. D. .tonee stated l.bal the com-| 1 paniea requiring were only I tihort of liquid securities. They required I J breathing time. The depressed value*' lof stock had wiped out. many farmers', we* lth, but the rec«nt improvements in ' prices would put their accounts into. : condition. \ j Mr. TJixon (Pateai i:ongr«tulate.d tin: j Government upon the bill. There had j been no provision in the New Zealand) law. as v.-as the cace in England, wnerc | i the majority of the creditors couid lie: . protected against an obstinate minority, j j The legislation would give great; satisfaction. i , i Mr. Lee : Minister of Justice, in reply, I ; ! said that the Court dad the power to} I j direct a meeting, ''lit not. the naturo i 'of tbe arrangement. It could subse- j . ! qitently approve or disapprove of pro- j ' ! poeale, but could not modify them. It i the Court failed tn approve the corn- ' pany must go into liquidation. He would ' ' provide that the bill should cense to j r oixrete on December :)J. 192">. II '