Liquidator appointed for finance firm

Press, 21 January 1984, Page 7

Liquidator appointed for finance firm

Creditors of Manson and James, Ltd, owed about $230,000 have appointed the Official Assignee, Mr I. A. Hansen, to act for them as liquidator. The decision was made yesterday at a meeting called by the Deputy Official Assignee in Christchurch, Mr L. A. Saunders, after a winding-up order was issued against the company in the High Court on December 7.

The company’s managing director, Mr Don Good, attended to answer questions. The meeting was adjourned when Mr Saunders found the answers to be • what he called unsatisfactory and evasive.

Mr Good said, in reply to a question, that he was formerly involved with Zenith Applied Philosophy (ZAP). He told the meeting that Manson and James had “nothing to do with ZAP.” Mr Saunders said that the Official Assignee had not been' able to establish a firm list of creditors or of the company’s assets because he had not been able to inspect its books and records. He also said that Mr Good had registered a debenture for $20,000 in favour of himself on October 21,

last year — six days before the winding-up petition was presented in court — and had, on the same day, appointed himself as receiver. Mr Saunders told creditors that the debenture, executed on November 15, was void against the liquidator because it appeared that it had been given for past advances and because it had been issued within 12 months of the winding-up order.

In reply to questions put by Mr Saunders, Mr Good said that he and his wife had bought Manson and James, Ltd, through solicitors on April 1, 1982, and established a financial consultancy which had derived most of its income from insurance companies on commission.

It had sold unbundled contracts — a - form of superannuation — and the earnings from this had allowed it to provide its other services free of charge.

“Aggressive” techniques had been used to attract clients; people had been employed to call on business houses, to telephone people, to write to them and to talk to them on the streets. Mr Saunders said the company owed the Inland Revenue Department about

$35,000, and asked if any tax had been paid. “I believe that.it was paid in the earlier stages, but I’m talking off the top of my head.” Mr Good replied. Asked if “considerable sums of money” had been borrowed from people to fund the company’s activities, he said that the question fell into the category of those that he was not prepared to answer at the meeting. “Then I will tell you, what I think,” Mr Saunders said. “According to my records, the company owes about $170,000 to what I will call members of the public. Would you dispute that?” The debt was neither disputed nor confirmed by Mr Good, who said that he had “no idea”; the statement of the company’s affairs had yet to be completed. Mr Saunders said he understood that, included in the figure, was a loan of $54,000 advanced by New Zealand Insurance and secured against Mr Good’s mother's property. “Is that correct?” he a s Iced “It sounds like it,” Mr Good said. Mr Saunders then asked if the debt was being pursued through a mortgagee sale.

He was told that Mr Good hoped not. The meeting was told that the company had banked more than $570,000 from August, 1982 to last February, but that there was no record of where $380,000 of it came from. Cheques had been cashed for $360,000, but there was no information to • show who they had been paid to. Mr Good said that he had “no idea” whether the statements were correct and that, if Mr Saunders put the questions to him in writing, he would reply “in due course.”

“You are the manager of the company. It is a pity you cannot give me some sort of answer. I am sure that most of the creditors in this room (about 20 attended, three of them former employees) would have been interested to know where the $360,000 went,” Mr Saunders said. He then said that cheques for $132,000 had been cashed at the Fendalton Service Station, but Mr Good was “not prepared to comment on that at this stage.”

Mr Saunders told him that lie had acted unreasonably in attending the meeting without having the relevant r details; a comment

that attracted a disgruntled “hear, hear” from some creditors. Mr Good was asked to explain his involvement in Ice Cream Specialities, Ltd, and Macro Foods, Ltd. He refused to answer, saying that he was there to discuss Manson and James. However, Mr Saunders said that the three companies had shared a bank account; a claim that Mr Good found too surprising to believe.

“Well, it is a fact,” he Was told. Creditors were told that Manson and James had transferred $150,000 to Macro Foods, $20,000 to Ice Cream Specialities and another $150,000 to Rand Foods New Zealand, Ltd. Some of this had been repaid, but $185,000 was outstanding and all three companies had been liquidated.

Mr Saunders asked whether a former manager, Mr Gerald Henry, had been given cheque-signing authority by the company. “Not as I recall, no,” Mr Good said.

He was told that, according to the Official Assignee’s information, Mr Henry had been authorised to sign on the Company’s bank accounts and that he

had withdrawn $34,000 in cash.

“You say you didn’t know that?” Mr Saunders asked. He said that six companies Mr Henry had been involved with had been liquidated and a seventh had been struck off. He asked Mr Good if he attributed the failure of Manson and James in any way to Mr Henry’s managerial role in it.

“Strange as it may seem, no,” Mr Good replied. Mr Saunders said that the company had a total debt of about $230,000 and about 50 trade creditors. He asked if there were any assets and was told that there were “none whatsoever.”

“Can you say what happened to the money?” “Not without a full summary and presentation, no.” Mr Good had set up a new company similar to Manson and James and called Christchurch Consultants: He said that he had not used any funds or assets from Manson and James to establish it and that it did not take much capital to begin business in the finance consultancy area. The creditors were then invited by Mr Saunders to put questions to Mr Good if they thought it worth while.

After listening to Mr Good’s replies, Mr Saunders told him that he was “making a fool of himself.” “I’m not here to hear that sort of remark from you,” Mr Good said.

Mr Saunders replied that he had said it because it was “obvious.”

In reply to a creditor, Mr Good confirmed that he had been involved with ZAP for “a relatively short time,” but not since 1982. He said that Manson and James had had “nothing to do with ZAP.”

Towards the end of the meeting, Mr Saunders expressed his disappointment at Mr Good’s responses to questions. “If you had wanted to show faith with your creditors, I’m sure that you could have been more forthcoming with your answers,” he said. He assured the creditors that the Official Assignee would get an injunction or a court order of some sort to force Mr Good to hand over the company’s records. Mr Good said that he had been evasive because he needed legal advice “at this time” and reminded Mr Saunders that he had offered to reply to questions put to him in writing.