BURRELL AND DURRANT

Feilding Star, Volume 5, Issue 1203, 13 September 1927, Page 5

BURRELL AND DURRANT

Meeting Of creditors

BANKRUPT ESTATE Mr C. Dempsy, D.0.A., presided ab the first meeting or creditors in The bankrupt estate of Burro]] and .Durrani, motor garage proprietors, held iii the court house this morning. Bankrupts wore represented by Mr L. A. Elliott, Mr E. K. Taylor represented Air Hugh Burrell, Air <J. Graham represented B. Durra-nt, Air Oullihane appeared Inr Bain and Co., Air Afason for Treasure Cycle Co., and l hero was a. la rge mini her oi\ creditors present. The stateinent of liabilities etc. has already been published. It showed a. deficit of £3701, 10s Id.

BANKRU PTS’ STATEMENT. About the month of December. 19151. wo entered into partnership as motor garage proprietors. Air Hugh Burrell (father of the partner bankrupt, H. B. Burrell) arranged the necessary finance to purchase the section and erect the garage. We each put: in £IOOO and Air Burrell, sen., guaranteed the first mortgage of £2500 and took a second mortgage of £lO-44. He further guaranteed the partnership at the Union Bank. . The business soon became established and showed a profit, but for the last two or three years owing to general depression business declined. The position was discussed from time to time with our guarantor wlio considered things would improve and continued to hack us. Unfortunately at the end of last year the purchase and consequent heavy loss on cars bought, from I)ie Dominion .Motors, lad., brought matters to a head as on that transaction our guarantor had to find £I2OO in cash early (his year, lie having endorsed promissory notes given by the firm to the Company. Up to a few months ago our guarantor considered that lie had'a safe security In the second mortgage, hut when he was offered an adjoining section of equal area for £-100 he realised that his equity had gone and decided that be could not finance us further, as the bank debit was in the vicinity of £.‘5000. In order to help the situation we over .12 monthes ago dispensed with a salesman and cut. the staff down to a minimum and for the last four months one of the partners drew no salary hut took on canvassing for Dominion .Motors Did and Iteo .Motors Ltd. The motor business gene- 1 rally has been going hack in the country districts and the hope of a general improvement did not eventuate. AVo further experienced gr.eat difficulty in getting onr accounts in. Jii the hope of matters improving, and witli the consent and ’ assistance of our guarantor wti continued id carry on. In view of the fact that our guarantor could not see his way io assist any further it was decided to call a meeting of creditors and at that; meeting our guarantor offered a composition of 5s in the £1 which a large majority were in favour of accepting. only six voting against. As it was necessary to have a unahimous resolution we had no option but to file.

UNDER UROS&EXAMINATIUN

Hugh ,B. Burrell stated there was a partnership deed, which provided that eacli partner should draw a salary, which varied, from time, to time. It was £6 per week each. This included the drawings account.. The D.O.A. said the books showed in the last tliree years Air Burrell had drawn jC'ls2s, Aft- Durra.nl £7llO. During the past three months Mr Burrell. had drawn. £O6 and Mr Durrani £96. Bankrupts said the ears and motor bikes in stock were bard to quit, and were not increascng in value. Tools and plant were put down at present value. Bankrupts considered that the equity in the second mortgage had disappeared. There was probably no sale for the shares in the Vulcanising Co. although they wore worth.-the money. In 1925 the turnover was £16,000 and in 1.926 it was £7OOO, the drop being ?n car sales. To Mi- Cull inane: Idle section adjoining the garage was offered for sale at £4OO about three months ago. Mr Cullinane: Did the report that Bain and Co. were responsible for petitioners filing in bankruptcy emanate from the bankrupts? Both Mr Burrell and Mr Durrn.nt that they Ifnd been responsible Wo r this rumour. Mr Wright (Paterson and Co.). : Did bankrupts inform Paterson and Co in. March that the firm’s position was sound? Mr Burrell: T did not see the representative in March. In. .Tune I told him things were had, and did not tlirea.tgn at any time to take bur business elsewhere. The deed of .partnership provided that the part-

ners should, share hlio profits and liabilities equally. At each half yearly balance the partners discussed the position /With Air Aliers, and they were aware the business was making a. loss in the past two years. Mr. IT. Burrell, son., had horn in favour of carrying on, though ilie partners had discussed, closing up. They hoped the condition would improve. It, was realised a couple ol months ago that it would he best to finalise the position. Air Wright: When you wore carry itig oil at a. loss you were using creditors’ money? Air Burrell: Afy father’s money. All’ Wright: He was a creditor. /You made us promises you failed to keep. Air Slater: Can Air Wright bring evidence that his representatives were informed on March 0 that U>c business was sound ? ATr Wright said he could. Air Burrell said ho had discussed the business with a- representative of Pa.ierson and Co. and had said business was hard, but things were all rigid. He did hot know then the equity was not in the land. Air slater: \A a«. the, fact lliat the equity was not- ini the. land the sole reason for calling the creditors together? Air Burrell: There were other-rea-sons. j The. D.0.A.: Mr. Burrell, sour., was heavily involved, and the mat ter was largely his concern. Afr Macartney: Will Air Burrell explain, why Irs drawings are £770 in. excess of his partner’s? —I had the expensive- -part of the business to conduct. —-the car and sales department . • \

Did yen personally receive the commission and demonstration ox (lenses No it was paid to the salesman. Did you provide any explanation for your expenses?- Yes. .1 put in. notes of the particular expenses. When did an interval audit rif tiie partnership cease?—T cannot 101 l you. as I had nothing to do with the book's.

Afr Alders explained that he did not cheek the vouchers, but checked the hooks and the postings. Air Afaeartnoy: From what date did you begin to have the cheques countersigned.—-Aboil t two years or 19 months ago. Air Burrell, sen., had arranged for the eon n torsi.gn-

Afr Burrell had received a. deposit of £SO on sale of a. ear. This sale had mot 'yet been completed, but there was a. vorv small amount left as Air Wells bad been taking it out on contra account.

Both [partner* had 'taken an active interest, in the finances of the business. but. they did not know two years ago the business was insolvent. The balance-sheets showed a deficiency, hut the business was not insolvent been,rise Air Burrell, senr., was behind them. Afr Afaeartnoy • Each balance-sheet showed a loss. Was that not insolvency?—Bankrupt did -not understand it that way. Afr Macartney: Whn.t steps did you take to improve the position? —AYe cut down everything we could.

Mr Macartney We examined the books and we found that for three years Mr Burrell had drawn an average of. £8 a. week. All Burrell: I had to travel over practically the whole, of the North Island, in connection with- agencies. Wo gave up these agencies about six months ago. Air Alaeartney: Did you think the expenses incurred in, these. trips were warranted ?—We gave up these agencies when we found they wore •not payable. 1 Air Alaeartney: There was no proper apportionment of the expenses of each department?—No.

Mr Alaeartney said lie wanted to discover where the loss had been made.—Air Burrell thought it was in the ear sales department: Air Aliens explainer! that he had followed the practice of Air S. Al. Hobbs, his predecessor, in keeping the hooks, and preparing the balance sheet. He did not go into the place ns an auditor. Air Burrell did not understand Air Aliens was an auditor. He was instructed to assist on the books month ly. Air Mi ers did not audit the hooks. Bankrupt tonic the balance sheets as prepared by Air Alier.s as correct.

Tn further answer, Mr Burrell said the firm’s clerk was also responsible for keeping the books. Air Cullinane pointed out that over the past two years each half-yearly balance sheet showed loss without tak ing into account the partners’ drawings. Air Cnllinaue: Each balance sheet, since, 1925, showed a loss, and after eacTi balance-sheet, a conference was held, What advances has Mr Burrell sen., made to the partnership since 1925?.

Air Taylor: The £1209 paid by Air Burrell, senr., was in connection with a guarantee he had made to Dominion Motors, to enable, the partnership to trade with that agency. Arts. „ Did you have knowledge of the sale price of land next your garage?—Ye* AVe considered we had a, valuable equity in our .own land until quite recently. Air Burrell; sen., w4s pre--

pared to wipe off the second moilgage on the garage property. Apart from the liability to Air Burrell son., the liabilites to -creditors had been very much reduced. To Air Macartney, Air Durrant smid he had i;«Ltended every eonfercinee of the firm though lie may not have seen every bn lan co-sheet.

Further, Air Macartney said in July, 1925, an .amount ol £27 was paid to the Receiver of Land Revenue. What was that ? —Air Burrell said it was his own account. So far as he was aware, it, was charged against liis salary. The book produced showed it was charged to general expenses. Mr Macartney, to Air Burrell: This was your private account?—Yes. £ do not know why i(. was charged to general expenses. J. know of no other similar payments. Air Durrant had no knowledge of any such payments. He had signed blank cheques when asked to do so by the clerk. To Mr Slater: The advance made by Air Burrell, sen., of £I2OO to Do. inion Motors was made at the request of the Dominion Motors.

Air Slater: What attitude would you have taken if other creditors had asked for similar guarantee? (Laughter).

Further, Air Slater asked if Air Burrell, as a garage proprietor, was in tire habit of making payments to the Receiver of Land Revenue? —No. Air Graham (to Air Durrani): A T ou are and always have been a working mechanic?—A’es. During the whole period of this partnership I was solely in charge of (lie workshop, and did not interfere with any other part of the business. The D.O.A. said lie proposed calling for fenders for flic slock.etc., in (lie garage.—The meeting approved, being satisfied that Ibis was a better proposal Ilian to have an auction sale. A committee, comprising the three largest: creditors, was appointed to consider the tenders. Air Slater proposed that the workshop he carried on by Air Durrani; in the meantime until the estate had been wound up.—Agreed to. The meeting decided unanimously that the assets in the estate of Air Durrant he handed hack to him. A similar resolution was unanimously adopted regarding the private estate of 11. T 5. Burrell. Alessrs Alaeartney and Wright proposed that the hooks of the partnership lie investigated over the past tliree years. Ali* Alaeartney said he was satisfied the creditors were entitled to know more about the affairs of the business. The motion was lost by a large majority. '

Air Aliens asked permission to explain' that he had not been engaged as an auditor by the firm. llis work was to assist with the hooks, and he bad done that, being paid month by month. He was not employed to prepare an audited balance-sheet.