Group 'could have continued trading’

Press, Volume CXIV, Issue 33577, 4 July 1974, Page 2

Group ' could have continued trading’

(New Zealand Press Association)

WELLINGTON, July 3.

The multi-million-dollar Cornish group of companies, now being salvaged by the Government, could have continued to trade under its present circumstances for two or three months, the Government-appointed manager of the group, Mr R. W. Stannard, said tonight at a press conference after his first full day on the job.

Mr Stannard, a Wellington chartered accountant, was called in by the Government to manage the affairs of the 78-company group after its founder and chairman, Mr A. S. Cornish, had gone to the Reserve Bank for help last week.

“To their credit,” Mr Stannard said, “the directors took steps to prevent prolonging things.

“We’ve seen other collapses where things have been taken too far," he said. The position for the whole group was that much of it was profitable, Mr Stannard said. With the exception of the deposits, the group would carry on as it did before. "It got into trouble purely and simply because it relied too extensively on borrowing over a short term,” he said.

In six out of seven months last year, more money was paid out to depositors than was received. Mr Stannard said the fin? ancial climate was another factor in the group’s collapse. He denied that bad management could have played a part.

“The executives of the group took steps over the last two or three years to improve its management structure,” Mr Stannard' said. Asked if investors would get their money back, he said: "In time, sufficient funds should be available.” Mr Stannard said one or two companies which had big losses in 1973 made considerable improvements this year. “In the March, 1973, financial year, the group showed a substantial loss, but on draft accounts this year it is showing a profit,” he said. Mr Stannard said that there had been no pressure over the last few months from any secured creditors to have the group “go to the wall.”

One of Mr Stannard’s first jobs this morning was to send telegrams to the staff of each of the group’s companies and branch offices. “I have assured the employees of the group—there are about a thousand—of

continued employment,” Mr Stannard said. “I have the full support of all the staff I

[have been in contact with so i far, and it is most encouraging.”