IN LIQUIDATION

Nelson Evening Mail, Volume LXVI, 22 December 1933, Page 4

IN LIQUIDATION

PREMIER TOBACCO COMPANY BUILDINGS IN NELSON AND THE CITY COUNCIL DECISION BASED ON LEGAL ADVICE Following on the Premier Tobacco Co going into liquidation, by the conditions of the company’s lease from the Nelson City Council of property in Halifax street, the Council can assume ownership of the buildings of the com- , pany without obligation. In reference to this matter, the Council at last night’s meeting received the following letter from its solicitors: — “Notice was given by us of the Council’s intention to re-enter and determine the lease on 18th December. _ The liquidator now asks the following concession, namely, that he he given time to dispose of the building and tlie lease for the benefit of the creditors. According to the terms of tho lease the Council cannot assign its interest except to some bona fide company carrying on the same business, and if the liquidator is given time to sell he will want the Council to waive this condition. The Council, in cur opinion, cannot safely grant any indulgence to the liquidator. Under tlie original lease the Council granted a term of 21 years with the first five years at a nominal rental. This was agreed to by the Council, on account of a covenant in the lease to erect a building at a cost of £2OOO and in order to foster in the city a new industry. Neither inducement now exists. By clause 8 of the lease the Council has the right to re-entry upon the company going into liquidation and the company, or its liquidator, has one month’s grace after such determination within which they can remove the buildings, and if that is not done at the end of . the time, they become the property of the Council, without compensation. In view of this, the only safe course for the Council to adopt, is to re-enter in the terms of the lease.”

The Mayor (Mr W. J. Moffatt) said in the matter the Council had to keep on side with those interested and also keep in mind its duty to the ratepayers. It was a matter for regret if the Council had to do anything of the sort indicated in the letter. He was sure he was speaking for the whole council when he said all had hoped the company would have established a first class industry of value to the city and district. When the Council gave a nominal lease for five years no one had any idea of the Council becoming pos- . sessed of the building for nothing. If the liquidator could dispose of it to another company to carry on the same industry lie was sure the Council would be sympathetic. He bad made a suggestion to some of those interested in the tobacco industry that to safeguard their interests they might take over the building and use it for its original purpose. Some years ago the Council had a similar case in regard to a building on the tip property. In this case the improvements had gone to the Council, and being sympathetic, the Council bad approached the Auditor-General in regard to the purchase of the building, in spite' of tho fact that it could get it for nothing. The- reply had been that the Council could do what it wished in the matter. The Council did not like taking the building and had paid £l5O for it. The owners appreciated the action. In this case, however, the budding was so large that the Council could not act similarly. Some had suggested the building could be converted into a fire station, but judging by the plans of the building required for this purpose 'that was impractic able. The people interested in the building were distressed about their position, continued the Mayor,- but if the Council could stay its hands and give the company a chance to transfer to another company, it would help the shareholders. All realised that the shareholders were unfortunate in being misled over the matter. He asked the Council to look at it from a neighbourly point of view, knowing that a lot of local people had fallen in over the venture. Nothing could prevent the_ Council leasing the building to some other company for the sake of the tobacco industry. He felt the present Council would exhibit the same spirit in this case as a former Councii had done when confronted with a similar position After a brief discussion in which it was pointed out that the Council must act in accordance with its legal advice, a motion was passed instructing the solicitors to act in accordance with the law. “I regret to have to do it,” commented the Mayor as the motion was put to the meeting.