VOLUNTARY LIQUIDATION

Northern Advocate, 5 November 1932, Page 9

VOLUNTARY LIQUIDATION

FIRM OF MACKY-LOGAN. SHAREHOLDERS’ DECISION. CONSIDERABLE LOSSES. (Special to “Northern Advocate.") AUCKLAND, Friday. , A general meeting of shareholders of Macky, Logan, Caldwell, Ltd., held in the Chamber of Commerce this morning, decided that the company should go into voluntary liquidation. In addressing the shareholders, Mr T. M. Macky, chairman of directors, said that the confidential memorandum circularised among them covered almost ail that could be said, and simply emphasised the reasons given for the discussing of the' “extraordinary resolution’’ to go into liquidation. Air Mack} 1, said that.the trading results of the company during the six months ended July 31 last showed a further considerable loss. The company’s overdraft at the bank was considerably in excess of the ( arranged limit, and, while the bank was prepared to find further advances, subject to conditions, it declined to find interest due to depositors on February 1, 1933, so that the directors could no longer rely on carrying out the obligations they had entered into by deed with the depositors. The conditions on which the bankers of the company agreed to find money for trading involved, in the opinion of the directors, a liquidation of assets in so short a period that further losses would accrue. Recognising the danger of incurring further losses, the conclusion was arrived at that, owing to the conditions prevailing and the uncertain outlook, together with the accumulated losses and obligations, the company was unable to carry on. Excess of Liability. Tho statement of assets and liabilities taken from the audited books at the half-yearly balancing period at July 31 might assist shareholders in coming to a decision. Tho directors viewed with concern the continued Josses which had been incurred, but they were not unmindful of the results of the liquidation of such a large and old-established company. During the past half-year a net loss had been sustained of £39,2.12, which, with the loss carried forward, made a total loss of capital at July 31 of £172,632. After making provision for the payment of £587,557 due to tho bank, depositors and sundry creditors, and for accumulated losses amounting to £172,632, there was an apparent surplus of £351,626 .available towards satisfaction of tho amount due to the shareholders in respect to share capital. “But it must be remembered,’’ said Mr Macky, “that this is the book value and taken as a going concern.’’ No attempt had yet been made to value the business from the shareholders’ point of view, because there was no reliable basis on which lo build. The stock and book debts were faithfully shown at. their respective figures. All Hie other assets were more or less of a fixed nature and their value depended on tho opportunity to sell them. On the liability side the trade liabilities wore not heavy as compared with the volume of trade the company commanded, and the bulk of the liabilities consisted of hank advances and depositors’ loans. Included in. the trade liabilities tho amount owing in London was taken at £50,000, against which goods were either at tho London packers or in transit. Six Years’ Slump. It would be impossible, said Mr Macky, to detail the difficulties of trading and management which had been encountered since the slump of .1920-1921, and more particularly dnr-

ing the six years since 1926. The com

pany had to face a constant' lowering of values in the class of goods it dealt in, which had resulted in serious competition, with price-cutting in nearly all lines. The interest on the bank advances and the depositors’ loans had been a very heavy charge on the business. Constant attention had been given to costs and expenses of the business, but the fall in values had in nearly every case nullified any savings, while award rates of wages, interest, rates, insurances, and other fixed charges had all added to the burden. In August, 11)31, the company* found it necessary to call a mooting of the depositors to obtain an extension of the due date to 1934. Certain of the depositors had not signed the deed and some of them had threatened action to enforce payment. In looking ahead the directors could see no way of meeting deposits coming duo in 1934 and 193(i, and at the same time carrying on the trading activities on their present scale. The directors had carefully examined the prospects of the future and there, were no indications of an improved position in the next two or three years to warrant incurring further possible losses —withholding depositors’ capital, interest, and incurring further debts of the company. After thorough consideration the directors recommended the voluntary liquidation of the company. The preference shareholders, and indeed all shareholders, had stood out of their interest and dividends for some years, and no good purpose cquld bo served by carrying on the present financial structure of the company. The resolution that tho company go into liquidation was then put and carried without dissent. Company’s History. The company was brought into existence in the year .1882, and has therefore just completed 50 years of life and service to the community. Tho founders were well-known Auckland men, Messrs J. C. Macky, .1. F. Logan and D. E. Caldwell. Of these Air Caldwell is still living, but has not been directly connected with the management for some years. The business had very small beginnings, and grow with the city and country till it provided employment for over 2000 persons. Its chief business was wholesale warehousing but it had manufacturing interests almost as large.

Scctious of the firm’s business have been formed into separate limited companies, which have been encouraged to develop entirely separate businesses. They comprise the Cambridge Clothing Company, Ltd., the Classic Manufacturing Company, Ltd., tho Plummer Hal: Company, Ltd., all of Auckland; tho Manawatu Hosiery Company, Ltd., Palmerston North; the South Canterbury Woollen Mills, Ltd., Timaru; and tho Oamaru Woollen Factory Company, Ltd., Oamaru. These are not affected by tho liquidation of the wholesale warehouse; company, and will bo canying on as usual.