Broker’s creditors want Exchange fund to pay up

Press, Volume CXV, Issue 33917, 9 August 1975, Page 1

Broker’s creditors want Exchange fund to pay up

Creditors of Australasian Secured Deposits, Ltd, which was put into liquidation five years ago after the 8600,000 crash of a Christchurch stock-broking firm, have instructed the liquidator to go to the Attorney-General (Dr Finlay) in an effort to get satisfaction from the Stock Exchange Asssociation’s fidelity fund.

Supreme Court action will also be taken against the fund, and against the fidelity fund of the New Zealand Society of Accountants.

Australasian Secured Deposits (A.S.D.) was a short-term money market dealing firm closely associated with P. J. Byrne and Company (formerly a member of the Christchurch Stock Exchange). A meeting of creditors of A.S.D. yesterday officially registered their disquiet at the repeated rejection of claims made on their behalf against the Stock Exchange fund, and instructed the liquidator (Mr Hugh Beattie) to release his report to the public. In the five years since he was appointed. Mr Beattie has paid unsecured creditors

I four dividends totalling §223,104, or 65c in the $l, and three secured creditors §62,908.74 out of realised assets of. the company. Other assets were secured in the names of other creditors. Another dividend on claims of $199,000 against the bankrupt estate of P. J. Byrne, amounting to 22c in the $1 has been achieved, and a second dividend from this source of between 2c and 4c is expected. Mr Beattie said in his report that he was now able to determine, with reasonable accuracy, the probable losses incurred by creditors, and contributories to the liquidation. “I hope to initiate proceedings against the two fidelity funds alleged to have been in existence to afford some protection to unpaid creditors of accountants in public practice, and of stock and sharebrokers,” he said. It was not possible to assess what, if anything, might be recovered from either or both of the funds. In May and December, 1971, Mr Beattie instructed all creditors to lodge claims against the fidelity funds of the New Zealand Society of Accountants and the Stock Exchange Association of New Zealand. As well as these individual claims, Mr Beattie ! lodged claims against both : fidelity funds. “Both the society and the association refused all claims.” Mr Beattie said in his report. “Since then I have done certain preparatory work with regard to possible further action agajnst the fidelity fund of the New Zealand Society of Accountants. I still await the Supreme Court decision in a recent case against the fidelity fund in connection with Mamselle

Fashions, Limited, which I expect, should provide significant guidance regarding some aspects of our case against the society fidelity fund. “However, as this decision is imminent, my solicitors have recently written to the solicitors acting for the New Zealand Society of Accountants asking whether the trustees would raise any objections to the immediate issue of proceedings by the liquidator,” Mr Beattie said. “In addition, I have written to the local committee of the stock exchange seeking a meeting in order to put before it my opinion, and that of my committee of inspection, regarding the claim lodged, and its rejection. “This thev courteously refused, considering it to be more properly the function of the board of management of the fidelity fund. As a result I wrote to the secretary of the board of management setting out our opinions, and

seeking a meeting with the board. “In reply I received a letter from solicitors acting for the board, in which the board declined a meeting, and reiterated its rejection of our claim. It appeared from unofficial inquiries that the board of management of the fund would consider an application from Mr Beattie as liquidator now, but the application would need to conform with the board’s earlier requirements. These included recognition that the board had absolute discretion to accept or reject the claim, and that each claim was restricted to $lO,OOO. “I do not intend to recognise the board’s absolute right of discretion in matters which concern the rights of creditors in this liquidation. I am seeking a way by which the justice of your claim for compensation might be decided upon by the Supreme Court.” Mr Beattie said. “I have not yet found a way past the apparent protection with which this fund is shielded,” Mr Beattie said.