Bateman’s hopelessly insolvent — Judge

Press, 15 June 1978, Page 5

Bateman’s hopelessly insolvent — Judge

It was apparent that the company was hopelessly insolvent, Mr Justice Roper said in the Supreme Court yesterday when making an order to wind up Bateman Television (1973), Ltd. His Honour was told that the company had a deficiency of about $lOO,OOO. Mr R. L. Kerr appeared for the petitioning creditor, jA.W-A. (N.Z.), Ltd, which was awarded costs. The Official Assignee (Mr I. A. Hansen) was appointed provisional liquidator. Mr P. G. S. Penlington, who appeared for Mr W. A. Hadlee, the second-debenture holder and Mr S. W. Bullen, the receiver appointed on May 25, made a last-ditch effort to delay the winding up of the company so that it could be sold as a going concern. Other counsel appearing at the brief hearing were Mr J. R. Fox for Bateman’s, Miss J. M. Drake for Pye, Ltd, Thorn Radio Industries (N.Z.), Ltd, North Island Electrical Traders, Ltd, and Mr Kerr, who also represented Autocrat, Ltd, E.M.1., Ltd, and Fountain, Ltd. Mr Hadlee was the holder of the second debenture not in his own right, but as a liquidator for three of the original Bateman group of companies.

Mr Penlington said that since Mr Bullen had been appointed receiver by Mr Hadlee on May 25 he had accumulated a good deal of information about the business, including a stock taking. He was now in a position to give that information to four organisations which were prospective purchasers of the company. A great deal of time and work had gone into the survey, the cost of which was borne by the debenture holder, who should be permitted to proceed with the negotiations. So that negotiations could proceed for the sale of the company as a going concern Mr Penlington asked that the petition for winding up be adjourned for minimum of three weeks and a maximum of eight weeks. He said that if the sale was not made within that period the liquidation could proceed. If the company was liquidated now any goodwill would disappear and the liquidation would revoke the authority to continue the business and the assets would pass to the Courtappointed liquidator.

Total assets were conservatively estimated at $274,511, which included goodwill estimated at $15,000. Deductions for the cost of commission for selling, receiver’s fees, and other items were estimated at $20,000 leaving $254,511. The first debenture held by the Bank of New Zealand was $28,686, leaving $225,825 available for the sc'.ond debenture holder, Mr Hadlee, who was owed $339,134 under the debenture. His Honour: Having regard to the company’s history what are the prospects of a sale? Mr Penlington: Four concerns have shown an interest in purchasing it. If the company was liquidated the goodwill would disappear, some leases would be terminated, hire-purchase discounters would deal only with the receiver and not the liquidator, and spare parts which the stocktaking showed to be conservatively valued at $36,000 would be almost written off or have a value of no more than 10 per cent of that figure, Mr Penlington said. His Honour said that with a deficiency of $lOO,OOO there would be nothing for the unsecured creditors.

Mr Penlington said that additional losses would be avoided if the company could be sold as a going concern. Mr Kerr said he opposed any adjournment of the petition and said that the figures which had been produced showed that unsecured creditors would not receive anything. If the receiver continued the business which incurred further debts there would be no advantage to the unsecured creditors. The second debenture holder should have appreciated the

position some time ago. He had only appointed a receiver after the scheme arranged to continue running the company collapsed. The matter had gone on long enough and the order to wind up should be made, said Mr Kerr. Miss Drake said she was appearing on the instructions of Mr Kite, who had told her to consent to the adjournment, but at that stage Mr Kite did not have the figures which had been produced in Court. She had been instructed to offer what assistance she could to assist in the sale of the business. In view of developments she would abide the decision of the Court. “When this winding-up petition was adjourned last week I indicated that al! other things being equal 1 would on this day make a winding-up order,’’ said his Honour. “Today Mr Penlington, on behalf of the second debenture holder, Mr Hadlee, who

appointed a receiver on May 25 after the scheme of arrangement had collapsed, seeks an adjournment . . . on the basis that there are good prospects that if the receiver is allowed to continue in possession a sale of the business as a going concern on reasonable terms could be arranged. “I have considered the figures provided by Mr Bullen, the receiver, and Mr Penlington’s submissions. It is apparent that this company is hopelessly insolvent and prima facie the petitioning creditors is entitled to a winding-up order. “As I see it no possible advantage could accrue to the unsecured creditors by further delaying the inevitable day, and the only possible benefit would be to the second debenture holder,” said his Honour. Bateman’s was awarded costs for the preparation of the scheme to continue running the company, which fell through.