TALKIES BLAMED.

Auckland Star, Volume LXI, Issue 218, 15 September 1930, Page 9

TALKIES BLAMED.

T. A. O'BRIEN'S FAILURE. DEFICIENCY OF £57,982. TOTAL INDEBTEDNESS, ... £240,257. CREDITORS SYMPATHETIC. A judgment for a debt of approximately £100 was' stated at a meeting of creditors," to-day, to have been the immediate cause of the bankruptcy of Thomas Alexander O'Brien, formerly a picture theatre proprietor, of Auckland, whose schdule showed a total indebtedness of £240,257, and a deficiency of £57,982. The . advent of ; the "talkies" was stated by debtor to be the principal cause of his failure. A- committee of three was elected to co-operate with the Official Assignee (Mr. A. W. Watters), in the realisation of bankrupt's principal asset, the, Empire Theatre, Dunedin. Assets were shown totalling £182,275, interest in various theatres throughout the Dominion amounting to £152,175, but the interest in the Dunedin house was stated to be the only one likely to realise much for the unsecured creditors. The total liability included a mortgage of £205,000 covering the Civic Theatre, Auckland. ' A resolution that bankrupt's discharge should be facilitated was carried unanimously, and several of the principal creditors paid a tribute to O'Brien's business integrity. ■ • Bankrupt's Statement. In tlie course of his statement bankrupt said that about twelve years ago lie came to New Zealand under an engagement with the Fuller, Hay ward Co., in Wellington,,arid, while with .that company, lie occupied nearly every high executive position. He secured a lease of the Empire Theatre,'Dunedin, nine years ago, and was so successful that from tunc to time he extended' his business to include leases of some nine other theatres, in Auckland and also in the South Island.. These included the Palace and His .Majesty's, at Blenheim; and Everybody's, the Plaza, tlie .Royal, the Tivoli; the Rialtp, the Britannia and the Regent, Epsom. - About September, 1925, it was decided to extend and rebuild the Empire. Theatre in Dunedin to meet the challenge in that town and the new picture | house being built by J. C. Williamson Ltd. For this purpose he gave a liret | mortgage of' £80,000 to the Bank of New Zealand, secured over the whole of his business and personal assets, and ,T ua ran teed by Messrs. C. Rhodes \ • J. Earner in consideration of his Paying them 4 per cent on the amount of tne overdraft from time to time. Civic Theatre Enterprise. About the. time of the completion of tlijs theatre, and before it could be refinanced,: the Civic Square problem became an ■ urgent one in, Auckland. As; most of' his Auckland theatres were in thb'stecbnteliiss he decided^if necessary, to halve one higli-class leading theatre as a nucleus for his other enterprises in Auckland. With this object in view lie approached the City Council and-seemed tlio greater portion of the. Civic ..Square ;block: He, then succeeded in procuring the aid of financiers in the city, and a 'company was promoted to build the ; Civic Theatre. ''. For the, purpose of .financing this company a mortgage was 'given, by-the company: to the Bank of New Zealand over the. company's pro'perty, guaranteed by various, shareholders and others,-the guarantors taking a second mortgage oyer the whole j of his assets. .lie: intended to refinance both the Empire Theatre .at Dunedin and the Civic Theatre in Auckland in 'conjunction with one of the largest . theatrical interests in Australia, and i negotiations were on the way in this j direction when the ; crash in the Australian financial position completely | killed all prospect of it. High Cost of Building. The cost of constructing, furnishing, and complying the Dunedin theatre came to some thousands of pounds more than provided for, and this, put additional strain on his finances. The Civic Theatre al/o cost a good deal more than anticipated, but even though it now stood at a total cost of £200,000 it was the cheapest theatre of its size and class that had been built in Australia or New Zealand. The Civic Theatre Company, in which he held a large number of shares, was probably the soundest of any theatrical company in New Zealand. His interests in the theatre were, of course, mortgaged with. his other assets to the Civic Theatre guarantors, but there was very prospect of the equities becoming valuable by reason of the cooperative agreement recently arrived at by the Auckland theatres, under which sound economy in many directions was resulting in much better profits. Advent Of The "Talkies." "One of the main factors contributing to my bankruptcy was the advent of the talkies," continued bankrupt's statement. "The installation of the talkie plant is a very costly matter, from three to five thousand pounds being required, according to the size of the theatre. • I succeeded ill installing the talkies in four of my houses, but this left me showing heavy losses in three or four theatres which' were not wired for talkies." This proved a tremendous obstacle. He had since succeeded in having the leases of the three unwired houses cancelled, and all further liability on his part terminated. .; - ' ...... ' - ' ■' ; .. Another factor was the action taken by the Commissioner of Taxes in levying land tax on a high scale on the combined value of a large dumber of theatre leases he held. This resulted in a claim for arrears of land tax of over £4000. With other theatrical people in Auckland, he had not known until. recently that land tax would be' assessed by the Government upon leasehold interests. "I would point out that virtually every big theatrical concern in New Zealand and Australia to-day is experiencing very critical times," continued bankrupt. "Notwithstanding the difficulties to which I have referred, I was, and am still, fully confident that, given time, I could have met all my obligations and paid all my creditors in full." He arranged a meeting of his creditors in order to put the* position before them, and at this meeting, held on August 13, 21 creditors, representing, approximately 55 per cent of his unsecured, liabilities, agreed that he should be given two years in which to consolidate his position. It was arranged that a period of a fortnight shoukl.be allowed.for other creditors to ascertain the wishes of .their principals. Only two creditors, both for small amounts, had intimated tha-t- they-;

would not agree to the suggested allowance of two years. On or about August 14 judgment was obtained against liim by a creditor in Dunedin for a sum of approximately £100. . The decision at the meeting was explained to the creditor, but he did not acknowledge the letter, and' the bailiffs were put in. In fairness to his other creditors he had no option but to file liis petition in order that steps could be taken to protect the asset of the Dunedin theatre for the benefit of his creditors as a whole. He was of opinion that had this creditor agreed to fall in with the wishes of the majority it would not have been necessary: for him to file, and eventually all his creditors would have been paid 20/ in thp £1. Civic Theatre Lease. In a further statement O'Brien said the Civic Theatre Company owned " a lease of the land from the City Council and the building and chattels therein. This was mortgaged to the Bank of New Zealand under a floating debenture, the bank having as security a syndicate' of guarantors. His position was merely that of a shareholder in the company. He had also; indemnified the* guarantors against loss, and to secure his indemnity he had given them a second mortgage over all his assets. His shares in the Civic Theatre Co., both preference and ordinary, were mortgaged to Messrs. 0. Nicholson and E. 11. Davie, to secure an advance by the Bank of New Zealand. The sum advanced stood with accumulated interest at about £15,750. His Civic shares amounted to approximately 14,700 preference, and about 13,000 ordinary Shares, all fully paid up. He also had a liability to the company for some 3000 contributing ordinary shares. The detailed statement of bankrupt's fiiianc.es showed , .claims of unsecured creditors amounting to £32,407 19/8, and those "of secured creditors to £99,500.'The'estimated valU'e. of securities was returned at'xl27,(Joo> and other liabilites- were, £207,850. Total debts were £240,257 19/8. Assets, included property, £152,175, furniture in the Dunedin theatre, £2000, and a surplus from securities in the hands of unsecured creditors, £28,100. Total assets were £182,275. "Just Too Late." ■ •Mr. E. W. Jnder, representing -•bankrupt, said the Dunedin creditor- whose action compelled O'Brien to file stated soon afterwards: that'lie was willing to do anything-he could to . enable the bankruptcy to be .annulled. Unfortunately by then it was just too late. The assignee suggested that a small committee should be appointed to act with him in the realisation of the assets. This met with general acceptance, and Messrs. L. J. Stevens, S. Rodgers and E. C. Hide-were elected. Mr. O. Nicholson said if the Dunedin theatre realised anything like its cost price—and that was by no means an impossible proposition, as It had paid 11 per cent—there should be a substantial sum for the unsecured creditors. Unfortunately a . considerable amount had had to be taken from it to meet claims in connection with the Civic Theatre. Mr. Stevens said lie represented Mr. J. Griflin, of Oamaru, who was a creditor, for the sum of £1800. Mr. Griffin had written stating that Mi'- O'Brien had made a, wonderful effort to bring the theatrical business up to the needs of the time, and that it would be a catastrophe if he was handicapped bv failure to secure his discharge.from bankruptcy.. Mr. ;"Ste\-ens' tnoved charge should be facilitated. This was promptly seconded. A Tribute by Film Industry. ' Mr.C. F. Eskcll, a representative of the film .industry, added a tribute to bankrupt in respect of his business integrity and his ability in matters theatrical. .'Mr. O'Brien', lie said, had gone through an exceptionally trying ordeal. The theatre happened to be built at a time which proved to he one of transition, in the entertainment world consc-' quent upon the advent of the "talkies." Mr. 10. R. Davis expressed similar sentiments. He said he had come into elbse business contact' with Mr. O'Brien during the last 12 months, and had always found him strictly honourable. The main trouble was that the Civic Theatre had been started at what subsequent events proved . could not have been a worse time. The motion that debtor's discharge be facilitated was carried by unanimous vote.