LIQUIDATOR IN TROUBLE.

Auckland Star, Volume LIV, Issue 148, 23 June 1923, Page 9

LIQUIDATOR IN TROUBLE.

ADVANCED HIS OWN MONEY. REPAYMENT CHALLENGED. The fact that a liquidator of a company had paid s&aie of his original creditors in full, to ensure further credit from them, when the assets of the company only justified a dividend of 5/ in the pound, was the essence of a charge of misapplying the funds heard at the Supremo Court yesterday. It was stated that the defendant, M. W. Bidwell i (Mr. Hunt), without any suggestion of ' dishonesty, had paid two creditors in full out of his own pocket, a sum of £90, and had later recouped himself by rej taining this amount from the funds of I the company. The plaintiff was A. h. Tike (Mr. j Leary) the present liquidator of the ; Foster Fraser, Ltd., the defendant being I his predecessor in tliat capacity. 1 Mr. Leary stated that the Foster Fraser, Ltd., a private company, went into liquidation in 1022, but was reconstructed under the name of the Foster Fraser Manufacturing Company, Ltd. The latter also failed to make a success of the business and went into liquidation. The first liquidator of the old company declared a dividend of 5/ in the £, i ' which he paid except to certain large j creditors. Subsequently defendant took j over the liquidatorsbip and paid two of j ; the creditors in full out of his own : pocket. Later, wheii the old company had funds he compensated himself. ! Counsel submitted, that this was ! irregular. j Mr. Hunt raised two preliminary points, the first of which was that plaintiff had not the right, to sue. because he , did not represent the creditors of the old I company. Further, plaintiff must, he said, show a cause of action which would have been good before the company went into liquidation. ; After arguments by counsel, his Honor I reserved his decision.