AGAINST LIQUIDATION

Evening Star, Issue 21992, 30 March 1935, Page 10

AGAINST LIQUIDATION

EXECUTIVE TRUST’S DEBEN-TURE-HOLDERS BTATEMEHT OH THEIR BEHALF SAFE RECONSTRUCTION DESIRED [Pmt Ukitkd Fizii Association.] AUCKLAND, March £9. The following statement was made today by Mr H. P. Richmond, on hehalt of the Investment Executive Trust Dc-benture-holclers’ Committee, regarding the statement made by the Minister of Finance (Air Coates) in the House last night;— “The outstanding feature to me is that there is nothing in the statement to show whv the debenture-holders should be forced to accept liquidation instead of reconstruction. Legislation msv be desirable to: (a) Protect the assets for the debenture-holders, and (b) even to apportion those assets fairly amongst the various classes of deben-ture-holders in default of agreement amongst themselves. The debentureholders have always assumed that as the 'Government has already proceeded so far outside of the ordinary company law it would, if necessary, assist the de- ■ benture-holders by such further legislation. if any, as might be agreed, on after a full discussion of the views of the de-benture-holders and the ascertainment of their wishes in such a maimer as is readilv available under the Companies Act, 1933. “ So far as I can judge, no good cause is advanced in the statement issued by Mr Coates why the proposed statutory protection and assistance, which is coupled with statutory liquidation, cannot be given equally well without liquidation by providing for a reconstructed company in which the deben-ture-holders would have absolute control. Hie views of a large body of de-benture-holders in New Zealand constituting an apparent majority have so far been expressed as entirely against liquidation. They desire to maintain the framework of the Investment Executive Trust Company, but with entire control in their Lands and not in the hands of the former directors. “No opportunity "in the past few days, with the exception _of informal interviews, has ever been given to these bebenture-holders to present their views, although the existence of an organisation of holders which is now recognised in the statement of Mr Coates, and the names of its secretary and counsel have been well-known to the Government for months. The present’ statement is believed to be mainly the work of Mr J. S. Barton, S.M., whose valuable work is not unrecognised by the debentureholders, but whoso views, particularly as he did not consult the committee, may not necessarily be the last word. The exact status of Mr Barton in the matter is and has been unknown to the debenture-holders, who bad, therefore, no ground or basis on which to approach him.

“It,is a matter of great regret to the committee that only this week, when matters had already been so far pre-deterrnincd, were they given any inkling of the present drastic proposals. They feel that they and their counsel could have given very useful assistance in arriving at a plan which, whilst ensuring protective and helpful legislation, should not be so completely destructive of the Investment Executive Company, in which New Zealand debenture-hold-ers are concerned and the assets of which include a very large aggregate of valuable stocks and shares. Some of these shares are those of New Zealand companies which were perhaps not unnaturally disturbed by M'Arthur’s operations in obtaining such -large holdings. The do not, however, admit that considerations affecting these companies should affect their right to make the most of their assets or their right, which has hitherto been unrecognised, to he consulted in their own affairs, and to choose between the alternatives of liquidation, which many of them fear will he destructive of much they consider valuable, and reconstruction, which, with the Government’s assistance if necessary, they believe will give a much better opportunity of avoiding loss. “If at this stage a full and reasonable opportunity is to be given to the debenture-holders to consider the position as stated by Mr Coates,'and then to express their wishes and have them considered by a suitable tribunal without pre-determined views, they can have only thanks to offer to the Government. It seems impossible to credit that there is already any irrevocable arrangement with the New South Wales Govdi ament under which liquidation will be enforced. If that arrangement did exist it would be useless to communicate further with the debenture-hold-ers. “ One thing I would emphasise, and that is that there can be no possible need for forcing liquidation before next session. Any protective legislation which is immediately necessary to preserve the assets and prevent dangerous activities can be passed, but the question of liquidation must, in common fairness to the debenture-holders, as the only persons whose interests are really involved, be left over until ample time has been given for the consideration of the position as now presented. - As the debenture-holders are scattered throughout New Zealand, this will entail, as the committee knows from experience, at least one month of organisation, including the issue of circulars and the holding of meetings.”