Company’s indebtedness $40,000

Press, Volume CXII, Issue 33058, 27 October 1972, Page 14

Company’s indebtedness $40,000

A dispute over the repayment of funds to a social club within the Social Credit Political League occurred yesterday at a meeting of creditors of Southern Silicones, Ltd, a company in receivership.

A director of the company, Mr J. S. Fountain, answering a question from a creditor, said that his company had repaid in services the sum of $l2BO borrowed from an organisation known as the Square Deal Club. The creditor denied that the club had ever given authority for the money to be paid in any way other than cash.

Th Official Assignee (Mr 1. A. Hansen) intervened by saying that the Square Deal Club had submitted a proof of debt for $l2OO.

The proof was one of 54 Mr Hansen had received from unsecured creditors. The company’s total indebtedness is about $40,000, of which more than $9OOO is owed preferentially to the Inland Revenue Department for unpaid P.A.Y.E. deductions and about $6OOO to the Bank of New Zealand as debenture holder. Mr Hansen said it was un-

likely that the unsecured creditors — owed about $45,000 — would get anything from the liquidation of the company.

Mr Hansen gave the names of the shareholders of the company as S. G. Fitchett, J. S. Fountain, J. C. Matthews, R. Mcllwraith, M. J. Sim, G. F. Park, B. Boag, A. Williams, F. Twort, and R. Bockhop. He said the company had not yet lodged a statement of its affairs.

The company had advanced a number of reasons for its failure, notably bad management which appeared to cover a number of points. They included lack of communication between directors; recording, control, inadequate costing procedures; and a lack of knowledge of the requirements of the Companies Act.

“It appears from the information available that there was a disproportionate number of executives to working staff. It may be said there were too many chiefs and not enough Indians,” said Mr Hansen. "There was also a lack of defined duties for the executives,”

Mr Hansen referred to the initial capital of $5OO on which the company had been founded and then the addition of more capital. There

was no way of telling, however, if any of the capital had been paid up. He said the company had formed two other companies — South Pacific Industries, Ltd, and South Pacific Chemicals, Ltd. “Neither of these companies has been successful in any sphere of business. I have been told that the cost of setting them up was about $12,000,” he said. Mr Hansen also referred to a fourth company — Zincote Contracts, Ltd — which took over some contracts in Central Otago for the painting of railway bridges.

“It seems that Zincote Contracts took the benefit of some other contracts of Southern Silicones, their staff and assets including outside plant and office equipment.” Mr Hansen said he would investigate what consideration Zincote had given foi these things.

The receiver for the company, Mr J. W. Shanahan, of Shanahan and Winder, told the meeting that realisation of the assets would amount to about $12,000 of which $9950 had come from the assets of Southern Silicones and $1075 from South Pacific Industries.

The meeting failed to nominate a liquidator; this means that Mr Hansen will do that duty. Mr Shanahan was nominated for appointment to the committee of inspection.