DISTRIBUTION OF SURPLUS

Press, Volume LXXXI, Issue 24545, 19 April 1945, Page 3

DISTRIBUTION OF SURPLUS

LIQUIDATED COMPANY’S ASSETS

QUESTION OF PREFERENCE SHAREHOLDERS "Simply posed, the question Is; Do the preference shareholders share in the surplus assets?" said Mr L. J. Hensley, who appeared for the preference shareholders, at the hearing In the Supreme Court yesterday of an originating summons that his Honour Mr Justice Northcroft determine the method of the distribution of the balance of assets held by the liquidator of the Westport-Stockton Coal Company, Ltd. (in liquidation), and, particularly, whether preference shareholders should participate in such distribution with the ordinary shareholders. Although the question was simple, consideration of it had given rise to very considerable divergence of Judicial opinion In England In the past, said Mr HenSley, The point had not come before the courts in New Zealand previously. Mr A. C. Perry appeared for William Hardie, the liquidator of. the company, Mr Hensley for Stuart Palairet Godfrey, public accountant, representing the preference shareholders, and Mr E. A. Lee for Walter Baxter, merchant, representing the ordinary shareholders. Having discharged practically all the company’s liabilities and repaid, the face value of all shares, the liquidator estimated that approximately £34,155 14s 5d would be available for Anal distribution, subject to any direction the Court may make as to costs. In July, 1944. the Government purchased the mining assets of the company, and, at the date of liquidation the capital was £197,785 10s, made up of 262,940 ordinary shares of 10s each and 132,631 preference shares of 10s each, in 1905, when the company was formed, the company had ordinary capital of £150,000 In 10s shares, but the memorandum of association contained power to Increase the capital. In November. 1911. the capital was Increased by special resolution, by £50,000 in 10s preference shares, entitling the holders to preferential dividends at the rate of 8 per cent, and to any further share of the profits and, on winding up, to a preferential claim on the distribution of the assets, after paying the debts and liabilities of the company and the costs of winding up. Some 37,060 shares were not taken up, out were reissued in February. 1920. as preference shares. ... His Honour reserved his decision, after nearing legal argument.