Unprofitable Levin Garage Venture

Manawatu Times, Volume LV, Issue 6839, 21 April 1932, Page 9

Unprofitable Levin Garage Venture

PROPRIETORS EXAMINED AT CREDITORS’ MEETING. A meeting was held in ralmerston North on. Tuesday afternoon of creditors in the bankrupt estate of Keith Woodward Drysdaio and Allan Nairn Drysdalc, garage proprietors, of Levin. Mr. Cooper appeared for bankrupts whose debts -to secured creditors amounted to £1473 17s. The estimated value of securities was £1340 4s 3d, leaving a surplus to contra of £133 12s 4d. Debts to unsecured creditors totalled £7SS ISs 3d, and other liabilities £S37 4s Sd. Tho assets were valued at £l2B 12s -Id.

The principal unsecured creditors were:—Auto Parts, Ltd., £ll 10s Gd; J. Chambers and Bon, Ltd., £32 5s Id; Hope Gibbons, Ltd., £2B 12s Sd; McMahon Motor Supplies, £ls 15s 9d; Mercantile and General Insurance, £ll 9s Id; Michclin and Co., £42 10s 7d; Niven and Co., Ltd., £lO Gs; N.Z. Loan and Mercantile Agency Co., £9B 3s lOd; Shell Oil Co., £ll 9s Sd; Teagle, Smith and Co., £3O 14s lOd; Vacuum Oil Coy., £llO 3s 10d.

Creditors present were: Messrs. T. P. Rolling (representing N.Z. Loan and Mercantile Agency Co.); N. J. Bailey (Shell Oil Company); 1. IL Nimmo (Vacuum Oil Co.); T. A. Dodson (Me-, Mahon Motors, Ltd.), V. Keen (John Chambers and Son); E. W. Hubbaid (Holben and Hubbard); R. Luke (L JNiven and Co.); J- Drysdalc and D. McKay. The sworn written statement made by bankrupts was that they commenced business on December 24, 1930, on which day they purchased land, buildings, plant and stock at the puickaso price of £1387 15s 9d, including a mortgage of £893 Gs -Id, from the late C. M. Sellers, of Levin. When they took over the garage it was doing practically no business, but they hoped to work it up well in about twelve months. The whole of tho £494 9s 5d cash actually passed was advanced by their grandfather. Mr. J. Drysdalc, of Wellington, who was secured by second mortgage over laud and buildings and a bill of sale over plant and stock. Their grandfather arranged and guaranteed a bank

overdraft with a limit of £IOO in order that they might have sufficient cash with which to carry on. Business was auite good during the first six months of operations, but this was not reflected in the bank balances because a considerable proportion of their earnings was going on to the books and a good deal of cash was spent in alterations and improvements to the internal arrangement of the buildings, and iu purchasing additional essential plant, from about July, 1931, business began to slacken considerably and that had increased in proportion as the general depression had deepened. lor some time, however, they were able to carry on, as their grandfather allowed the bank overdraft limit to be increased first to £l5O and latterly to £250. .Subsequently a meeting of creditors was called and they were offered 2s (id in tho £l, but this was refused. Bankrupts had drawn less than £3 per week each from the business over a period of 15 months, though both were married and had each one child. They attributed their failure to the fact that the business was not able to support two principals; that it had no goodwill; that they had entered business in a period of depression; and that there had been severe competition, there being nine firms in Levin engaged upon motor repairing and engineering. As soon as they were advised that t-hcii position was hopeless they called a meeting of creditors, although up to

that date, realising that things were not good, they were hoping for an improvement which did not eventuate. Bankrupts, under examination, said they owed the Loan and Mercantile Agency Company ££)B 3s lOd for goods received on consignment, and were really bound to hold the proceeds of the sale of those goods on trust, but no trust account was kept. Proceeds, less commission, were remitted monthly while bankrupts were able to do so. Moneys received had been used to meet other payments which fell due. Apart from the original mortgagee of the land their grandfather was tbo only secured creditor. The books disclosed how the turnover had been handled. Not all tho money received was paid into the bank.

Subsequently the creditors passed a resolution that in view of Iho unsatisfactory state of affairs revealed by bankrupts' trading account their discharge be opposed until at least 10s in the £1 was paid.