FALL IN TAKINGS

Dominion, Volume 26, Issue 50, 22 November 1932, Page 5

FALL IN TAKINGS

Hotelkeepers’ Failure SALE OF THE ARCADIA Vendor Resumes Business. The acute economic depression, the rapid dropping of takings and the refusal of the landlords to reduce their rent were the reasons given for their failure In business by Mr. William Dean Smith and Mr. Walter Rutherford Flintoff, former proprietors of the Arcadia Private Hotel, Wellington, when they met their creditors at the office of the Official Assignee, Mr. S. Tansley, yesterday. They were represented by Mr. W. Perry. The amount owing to unsecured creditors was shown as £992/10/6, and the assets as £25, leaving a deficiency of £967/10/6. The principal unsecured creditors were:—Wellington City Council (balance outstanding on rates), £263/6/4; J. F. Turnbull, £lB2/1/3; IL Jervis and Sons, £145/12/2; Cresswell and Sons, Ltd., £62/5/10; Evans and Harrison, £6O; New Zealand State Coal Co., £43 3/9. Bankrupts, in their statement, said that in November, 1927, they purchased the goodwill and the lease of the Arcadia, together with the furniture, for £7500. They paid £lOOO, in cash, on taking possession, aud £5OO at the

end of six months. Also, they executed a mortgage of the lease and an instrument by way of security over the furniture in favour of the outgoing tenant, Mrs. Tiller, to receive the sum of £6500. The mortgage was reducible at the rate of £2O a week, the interest being £7 per centum per annum. While in the business they paid Mrs. 1 Tiller £Ol9O for principal and £l2ll 11/- for interest In August, ’ 1931, the payments on account of principal were reduced to £l5 a week, these being made regularly until September 5 of this year. The rent reserved by the lease was £3O a week and the lessees had to pay rates, and insurance premiums, aud for all repairs, both exterior and interior. Fall Started in 1930. Takings began to fall seriously from 1930. Between April, 1931, and June, 1932, bankrupts made frequent applications to the landlords for reduction of rent, but these were always refused, and in June, 1932, they , applied for relief under the Mortgagors and Tenants Relief Act, This application was adjourned pending negotiations between Messrs. Smith and Flintoff, the landlords, ami the mortgagee. In June, 1932, an agreement was entered into wherebj bankrupts agreed to continue to pay the same rent as previously, conditional upon Mrs. Tiller reducing her payments of principal to £lO a week aud her rate of interest to £5 12/- per centum per annum, and conditional on the landlord giving an' option for an extension of the lease for a further term of one year at a rental to be agreed upon. Drastic Economies. In 1931 and 1932 bankrupts effected drastic economies, but takings began to fall so rapidly that they were unable to carry out their agreement, and on September 29 last Mrs. Tiller retook possession of the hotel and the furniture. The lessors had not accepted a surrender of the lease. In 1928 and 1929, bankrupts added,, their average weekly takings were £192. This year they had dropped to £9B. Referring to the non-reduction of the rent, Mr. R. L. Macalister, who appeared for the landlords,, said that they could not make any reduction as they were not in a position to accept a lower rental.

Mr. Perry said that he wished to say, in favour of bankrupts, that they certainly had been triers, and if such abnormal times had not come along the hotel would have been in a flourishing position to-day. Mr. Macalister: “We realise that it has been a case of hard luck.” The meeting was adjourned sine die.