Conditional reprieve for Nationwide Air car-ferry service

Press, 20 December 1978, Page 3

Conditional reprieve for Nationwide Air car-ferry service

After an alf-day hearing;-a petition to wind ’up Nationwide Air, Ltd, was adjourned to January 30 by Mr Justice Somers in the Supreme Court yesterday so that a redrafted scheme for payment of the company’s debts can be considered by creditors, 4 ’ ’ I His Honour was told that i Nationwide' Air had debts of j hundreds' of thousands of I dollars and that its main j assets were an old De Haviland Heron aircraft and some air. licences over which it had a precarious hold. He was also told that if] the company were wound up I now unsecured creditors would get very little or! nothing. The adjournment of thej petition was granted on condition that Nationwide Air meets several stipulations; A number of documents have to be filed and served by | noon on January 23. ! If all the requirethents are] (complied with and it can be!

t seen that there is a scheme (with a reasonable degree of j precision, there would be an I order summoning a meeting (of creditors. His Honour said that five creditors who were owed $62,000 supported the petition and 12 creditors who were owed $454,000 opposed it. The Commissioner of Inland Revenue, a preferred but unsecured creditor for $37,000, and an unsecured creditor for $3OOO supported the winding up. A draft scheme put before the Court proposed the for-1 mation of a new company tOi fund the running of the Car-1 vair car air-ferry service be-1 tween the North Island and South Island: the debts owing by Nationwide Air to be frozen as at December 6, and from that date the revenue from the car air-ferry service to be used for day-to-day running costs and the rest to be distributed pro rata to creditors. Mr J. G. Fogarty, who appeared for the petitioning] creditor, Eagle Airways, Ltd, of Hamilton, which is owed! $6405, said that the debt had] been proved by affidavit. I Mr B. J. Scott, for Nation-! wide Air, submitted that the! petition should be adjourned] to enable the scheme to pay I the company’s debts to be] put to a meeting of creditors. He said he had been!

a.mistaken when he had told -ithe Court .last week- that J,Nationwide Ait had not been ; placed in receiverships e] Shortly before that hearing lithe Bank ■ of- New Zealand - had placed . the company in s I receivership. -; Mr Scott said that he also | appeared for the following t i creditors of Nationwide Air f which opposed the petition: fJ. G. Rutherford, owed , $20,000: Rural Management, .[Ltd, $81,630; International -I! Homes, Christchurch, Ltd, Boulder Consolii dated, Ltd, $5180; Haulaways fi Corporation, $48,083; Nation- , wide Akarana, Ltd, $116,055; ; Nationwire Transport, Ltd, ■ I $15,663; Nationwide Auto, | Ltd, $94,326 and $2587; New J Zealand Land Development! ]; Company, Ltd, $12,000; and . Norak Aviation Engineering, t Ltd, $43,428. ] Nationwide Air had sought ] to run the new car air-ferry service with Carvair aircraft ,:in substitution for the li(jcence for the De Haviland

, | Heron but permission had f been refused by the Air t (Licensing Authority. ,1 Nationwide Air, Ltd, and ’(Nationwide Akarana, Ltd,; .(each leased a Carvair air-; j]craft car ferry from a for-1 .leign bank which had since] , I withdrawn a substantial part ji of its investment because of Jthe decision of the Air I, Licensing Authority. .! If Nationwide Air were f wound up at this stage the, I] assets would not realise suf-; (ficent funds to pay the cred-! jiitors because by the time! j the debenture holder, the! l; Bank of New Zealand, re-1 ,;ceived its share there would i be very little left for the ; other creditors. ; Negotiations were under way for the sale of scheduled air services in the ’ North Island and Nationwide Air was going to concentrate on its Carvair business. The petitioning creditor, Eagle Airways, had been negotiating to buy some of Nationwide Air services and J when those negotiations ’ through it filed the petition. I If Nationwide A-ir were I wound up and, its air li» Icences lapsed its maip’.qssets (would disappear and other | companies would apply to (run those services. ! Eagle Airways had applied ;jto use the route between. (Hamilton and Gisborne and I had been granted a tdmpqr-

d ary licence for that route. If t,Nationwide Air were wound lup Eagle Airways would ghave an unfair advantage np.ver other creditors. ‘ Nationwide Air fnter!j national had been formed as j a funding company ■ and ! ultimately it Wpuld have a II capital of $350,000. .1 Both Carvair aircraft were ji flying and there was a con(sfderable demand for their j|services. The final decision] ion licensing wpdld be made ’I in the Supreme Court, said ’(Mr Scott. Mr Fogarty' said -he ; was still in doubt as taljWho , was applying to have the , meeting of creditors to conz sider the proposed scheme. -(It had not been stated that i the receiver wanted to put , the scheme to creditors. The only justification for : not winding up the company ’ that day, Mr, Fogarty said, : was that there was merit in ■ the scheme to be put to I creditors. It was conceded

1 that a number of creditors r opposed the winding up but the scheme proposed the information of another com- , pany with a capital of at -Ileast $350,000 to fund the ■Carvair business. It had ; | been suggested that creditors [[take shares in that company f in lieu of payment but coun'jsel considered that that, was impractical. :( Eagle Airways considered ! (that the proposal which had (been partly implemented • was so fraught with diffiilculties and so lacking in :! protection for the unsecured ■{creditors that it could not be I taken seriously. ; The licences held by Nationwide Air were held ’ precariously and the peti- ■ tioning creditor considered that the scheme offered no ; hope at all to the unsecured creditors. If the winding-up order were granted, the liquidator ; could still propose a scheme which could, meet creditors’ approval. The* liquidator would be a responsible persoS who could carry on running . the company if he Thought fit, Mr Eogdrty said. Mr P. F. Whiteside; for Truck and Maintenance Services, Ltd, of Wanganui, in support of the petition, said it was clear that the company was insolvent although a list of assets and liabilities had not been supplied.

It was significant that not one of the independent creditors opposed the petition but all sister companies of Nationwide Air did. The scheme was not financially viable, Mr Whiteside said. Mr D. J. L. Saunders, for the Commissioner of Inland Revenue, said he supported the petition. The department was owed $42,886 by Nationwide Air. Of that more than $39,000 related to P.A.Y.E. tax deductions and the rest to accident compensation payments.

Mr S. L. Kaminski, for Bob Jones, Ltd, and 8.P., Ltd, also opposed the scheme, which he said was detrimental to creditors.