BUTTER LIQUIDATION

Evening Post, Volume CXII, Issue 64, 13 September 1926, Page 10

BUTTER LIQUIDATION

SOME HEAVY RECLAMATIONS

PAYABLE OUT OF NEW SEASON'S

CREDITS.

Sinco the last season's New Zealand butter stored in London began to bo forced into tho market at much less than the reserve prices fixed for it, it has become evident that a good deal of butter will not realise the amount ad•sanced against it. In somo cases tho reclamation claim (that is, the claim for refund by tho .firm making the advance) will be considerable.

This butter has been stored by dairy factory companies on their own account; it has not been stored by the New Zealand Dairy Producers' Board. It is, however, understood that if any dairy company, against which a reclamation claim exists, is prepared to give the board an order against tho advances coming to such company for new season's butter, then the board will meet tho reclamation claim by means of payments out of tho new season's advances in such instal-

ments as the company may arrange

with the reclaiming merchant. Though "The Post" is not able to make the above statement with official backing, the statement is nevertheless based on good authority. It was gath ered as tho result of inquiries into remarks made on butter reclamations in a Northern contemporary, who, among other things, reports an Auckland merchant as saying:—

"In the past it has been the practice of London firms to stand by their client factories and give them temporary financial assh-tance to tide them over such a situation as has arisen. Now, however, that the board has assumed control the connection between the Tooley street importer and the New Zealand factory no longer exists; the goodwill which smoothed over many differences in tho past has vanished. If a factory is indebted to a London merchant for £1000 when last season's stocks are finally realised his New Zealand agent will bo expected to secure a prompt cash settlement. There can he no question of taking it out in instalments from .the next season's output, as this is controlled by the board."

if the last-quoted seutence means that payment by instalments will be prevented because it is not acceptable to tho board, "The Post" is assured that this is not correct, and that the true position is as it has stated above. If, however, the newspaper quoted means that payment by instalments will not bo acceptable to the firm making tho advance, that is another question. As a pure matter of business, and apart, from all questions of prejudice, is it true that goodwill has vanished, because the Tooley street importer's relationship is with the New Zealand Dairy Producers' Board and no longer with tho dairy factory company? If the importer still wants the business, and if he must get it through the board, will he adopt a prompt cash attitudo to companies knowing that such a course will make things harder for the board? In short, will ho bo less reasonable than in the past in cases whore reasonable treatment is warranted?

The same paper quotes the same merchant as stating: "Somo factories are said to be so far involved through th" depreciation of stocks of last season's produce that a compulsory settlement of accounts would mean closing down their factories and liquidation." Insolvency apparently presumes not merely a high rate of advance, but an excessive pay-out to the factory's suppliers—a matter entirely within the dis cretion of its own directors.