BANKRUPTCY PROBLEM.

Auckland Star, Volume LX, Issue 245, 16 October 1929, Page 9

BANKRUPTCY PROBLEM.

NOVEL POINT OF LAW. CLAIM OF A CREDITOR. SOLICITOR WOULD NOT ANSWER. "YES" OR "NO." What was stated to be a unique problem in bankruptcy law, at any rati* so far as New Zealand is concerned, arose to-day at a meeting of the creditors of Reginald George Allan, motor mechanic, of 102, Mount Eden Road, Auckland. An arrangement had been entered into for debtor to pay his solicitor a weekly sum, to be- distributed to his creditors, and it was stated by Mr. F. J. Newberv, bankrupt's solicitor, that there was a tacit arrangement that Allan should not be pressed. The point was raised by Mr. F. D. McLiver (for petitioning creditor) as to whether the moneys already paid, and distributed as dividends to other creditors, were recoverable. The meeting was adjourned for legal opinion to be taken. Debtor's financial statement showed claims of unsecured creditors amounting to £I!>3 !>/7, and there was a deficiency of £108 4/7. Bankrupt stated that his failure was duo to lack of experience, and to bis giving of guarantees with the cars he sold. He had business in a small one-car garage in November, 1027, with about £20 capital. The business increased and he moved into new premises. He did all right for about six months while he kept to repair work. He then started as agent for second-hand cars, which lie used to overhaul and guarantee. Cars often came back to him, and he repaired the results of careless driving free. His repair business did not keep going, and lie raised a loan with a money-lending,linn. He found he could not carry on, and dccidcd to look for a job. His chattels were seized and sold. Since lie had been working his relatives had helped him, and a ccrtain proportion of his debts had been paid. He was a married man with one child, and he was not in a position to pay anything to his creditors out of his wages of £4 19/ a week.

Allan said the loan he raised was for £50. He had hoped to buy a truck with it, but owing to the delay in gotting the money he missed the truck. He then distributed the money as best he could to his creditors. He paid two or three instalments off the loan. He rang up his creditors and told them he was going out of business.

Answering Mr. McLiver, debtor denied that he had authorised his solicitor to pay something to all his creditors (amounting to 4/(> in the £) but not to the petitioning creditor, who was the principal of the money-lending firm. Mr. Newberv said the principal creditor would not have lieen left out if he (Mr. Newberv) had not felt himself bound bv the arrangement that no pressure should lie brought to bear upon Allan. This arrangement was agreed to bv all the creditors.

'Mr. McLiver: Was there any written agreement? Mr. Newbsry: No, but it was an arrangement to which they all tacitly acquiesced. In reply to further questions by his fellow solicitor, Mr. Newbery said an interesting legal point was raised, and it would perhaps be better if he (Mr. Newbery) was subpoenaed as a witness. "I am prepared to answer the question fully, but I am not going to answer 'yes' or 'no.'" ill-. McLiver said the position was that there were certain moneys which previously were debtors, and £2 a week iiad been paid out. He (Mr. McLiver) thought action should be taken to recover on behalf of the petitioning creditor.

The Acting Assignee said tlie point would be investigated, and lie would adjourn the meeting. Tlie creditors would be called together at a later date,