Creditors May Be Paid 20c In $1

Press, Volume CX, Issue 32213, 4 February 1970, Page 1

Creditors May Be Paid 20c In $1

The receiver appointed by the Supreme Court for Port Supermarket, Ltd, of Lyttelton (Mr J. M. Tocker), told a meeting of creditors yesterday that they could expect to be paid about 20c in the dollar on the estimated $120,600 owing to them.

About 50 of the 350 creditors of the company, which is still trading at Lyttelton, attended yesterday’s meeting making it one of the largest held in Christchurch in recent years. Mr Tooker, who was appointed receiver last October, said that the company had an estimated total deficiency of $255,596, of which $160,000 was owed to ordinary and preference shareholders and the balance to creditors. One of the first things he investigated after being appointed receiver was the sources of the company’s losses.

He said he found that the company was carrying a burden of overheads amounting to $3OOO a week, was taking about $9OOO a week and making a gross profit of about 20 per cent. The company was therefore incurring a continuing loss of about $lOOO a week and for the year ended January, 1969, had had a net trading loss of $87,000. Before then it had been trading profitably. To July, 1969, the loss had been about $23,000. He attributed the losses to low sales, a big staff and high overheads. The company had a more expensive building and equipment than were necessary.

Mr Tocker said he had then asked the principal debenture holder, G.U.S., to find another and Mr M. K. Rodgers was appointed. Staff reductions were continued and efforts were made to increase sales and reduce costs. It had been found that overheads could be reduced to less than $2500 a week but not to less than the net profit of $l9OO.

The company had therefore decided to sell the supermarket as a going concern, but six land agents had failed to do so. Although ft was still on the market a sale was not very likely, said Mr Tocker. Mr Tocker presented a statement of the company’s affairs regarding creditors and contributors. He estimated the assets of the company as including $60,000 for stock in trade, $3OOO for machinery, $2500 for trade fixtures, $5977 for investments and book debts of $38,673, including $2055 regarded as bad debts.

The company’s estimated total assets were $135,341. After payments of preferential creditors and debenture holders this would leave a little more than $27,000 for unsecured creditors. The company’s principal debenture holders were given as the Bank of New Zealand ($24,000), Mrs M. Thomas ($8000) and G.U.S. ($51,000). Mr Tocker suggested five possible courses of action for the comply—continue in

business, sell it as a going concern, sell it in individual departments, sell the stock and plant and disperse the business or offer the business to G.U.S. He suggested that it would be very difficult for the business to break even under existing conditions and it would be better for it not to continue. So far no-one had been interested in buying it.

In written statements read by the Official Assignee (Mr J. G. K. Curran) the directors of the company—Mr E. j G. Stonestreet, general man- , ager of G.U.S., Mr P. J. Byrne, , chairman of directors, Mr W. , Dodds, managing director, Mr . L. M. Andrews and Mr J. W. , Richards, secretary—set out reasons for the failure of the , company. They spoke of considerable disharmony among themselves which had led to three directors leaving. Two of them had set up other businesses in Lyttelton in in direct opposition to the supermarket. Other factors,! they said were the high rent of $4BO a week.paid to G.U.S.,

big wage bills and too much concentration on food selling to the detriment of other departments. One director said that in spite of the company’s present position he felt confident that the business could flourish and the creditors be paid in full. The directors said they considered the economic recession and the shipping strike had severely affected the profitability of the company. The company was established in 1964 by amalagamating five shops which had traded successfully in Lyttelton for 30 years. A new building put up by G.U.S. had amalgamated the five under one roof.

The meeting carried two motions: the Supreme Court be asked to appoint Mr Curran liquidator and to appoint a committee of inspection to act with Mr Curran, the committee to comprise a representative of the National , Mortgage and Agency Com- 1 ■ pany and Thos Borthwick and I .ISons. ,* I