THE BANKRUPTCY OF ADAM LAYBOURN.

New Zealand Herald, Volume XXVI, Issue 9469, 13 September 1889, Page 6

THE BANKRUPTCY OF ADAM LAYBOURN.

THE BOOKS EXAMINED. A STARTLING REPORT. Tut. creditors in the estate of Adam Laybourn and Co. met at the Official Assignee's office yesterday afternoon, there being present : —Messrs. Tennent, N. A. Nathan (on behalf of D. Mitchell and Co.), G. W. Binney (Evans and Co., Thuaru), Thomas Allen, A. 1L Nathan (Gilchrist and Co.), T. Steadman (Smith and Co.), J. Knox. Mr. Law son, in reply to a question regarding the absence of the debtor, read a note from Dr. Lindsay to the effect that Mr. Adam Laybonrn was under his (Dr. Lindsay's) care for the present, and though he understood that be was expected to be present at a meeting of creditors that afternoon, be (Dr. Lindsay) considered it highly inadvisable for Mr. Laybourn to engage in busmen troubles, as if he were present he could not collect his thoughts, and was able to articulate only with great difficulty. Mr. Laybotiru had" been present at the last meeting against his express desire, and his only chance for recovery from his illness was jvxilonged rest, and if this were not. allowed him the consequences might be very serious. The Official Assignee stated that there were several representatives of creditors engaged at the Supreme Court, who hail expressed a wish to have the meeting postponed. Mr. G. W. Binney moved, " That the meeting adjourn till Monday," but on a suggestion that they go on as far as possible with the information available, he withdrew it. In reply to a 'question, Mr. Lawson stated that the sale of goody had realised £931 I"*} 3d, against which there was a lien of £730. The book debt.-* said to bo good, disclosed, amounted to £5839, of which £308 had come in voluntarily. Tho doubtful debts wore pat down as £2&i. Good bills were held for £250. The balance of consignments unclosed were estimated to produce £554, but they might result in a loss. As the majority of the creditors were in Australia and the South it was impossible to say for some time yet what the actual extent of the liabilities would be. Mr. Tennent asked what amount was now in the hands of Mr. Lawson, and was informed about £2000. On the motion of .Mr. Tennent, seconded by Mr. Binney. it Wits .agreed to place this amount at fixed deposit, so that interest might accrue during the period of delay that was inevitable. The question whether Mr. G. W. Binney was entitle*:! to commission on the amount of goods sold while his clerk was in charge, previous to the auction, was brought up, and caused some discussion, but was eventually deferred till a fuller meeting. The Official Assignee then read the following report by Mr. Arthur Hasell: — In the banknij>t estate of A. Ltybourn and Co., Auckland, September 9, IS, 1 -?!.—,J. Lawson, Esq., Official Assignee in Bankruptcy, Auckland. Sir,—ln accordance with instructions contained in your letter of 25th August, I have made a careful examination of such books of the al>ovenatnetl bankrupt as have been suh»mitte<l to rne. There are no vouchers, and my investigations show some of the entries to be of a most questionable character, the actual extent of the debtor's liabilities at the end of April, ISS9, are carefully concealed, but upon close examination it is evident that at that time he was bojielcss'y insolvent. The unsatisfactory state of the books cannot he attributed to ignorance or want of experience on {the part of the j-.-rsons In* whom they were kept, tin- irregularities apjear rather the effect of design than of incompetency. As the result of my investigation I report as follows :—l. 1 found that on the .'iOth April, ISS9, the financial {>ositiou of the bankrupt was approximately as follows: —Liabilities, £13,42(3 ; t assets, - £88IS ; deficiency. £4(XW. 2. I find that on the 15th August, ISB9. the bankrupt's position was as follows: Liabilities, €19,3-2 ; assets, .£1233; deficiency £7024, showing a loss between .'Xrth April and 15tn August, in present year of £24 A statement showing the relative [position on the alcove-named date is annexed. 3. I find that on 10th October, IS*S, the bankrupt opened a second account with the Rank of New South Wales, leaving the old a/joount with an overdraft of £32f>5 to remain in liquidation. 4. I find that on the .'?Jth April. 1889, the overdraft in liquidation account was reduced to £2401, and the new account was then overdrawn to the amount of £463. Total overdraft on that date, £2924. The relative position of the bank account oil the 30th April, and the 10th of August is shown in a statement annexed. There is nothing in the 'nooks to show what security was hold by the Bank on the 30th April, 1889. 5. I find that prior to the 'Xr.h April, 1889, the bankrupt discounted bills outside the Bank, and obtained advances in cash on goods and merchandise, some of which were afterwards redeemed, ujxm payment of interest, storage, et r .v (J. I find that on the 30th April, 1889, the bankrupt was indebted for cash advances to several parties in this district who have since been paid. 7. I find the approximate value ot free and bonded stock in hand on 30th April, 1889, to have been £2900, and the value of goods received from that date until the 15th August to be £25,511. The sales shown by the books between the 30th Ajjtil and the loth August, with the stock, free and in bond, held by the bankrupt at the time of bankruptcy, including securities held by creditors, amount to £25,941, thus showing a deficiency of £3520 in stock unaccounted for. 8. I find that large quantities of goods were sold immediately on arrival at lesa than cost price. 9. 1 find that large quantities of grain and potatoes wore consigned to Melbourne and Sydney during May, June, and July: these goods were mostly purchased in Duneain and Christchurch, and shipped to the bankrupt here, but immediately on arrival were reshipited in this (tort, and consigned to firms in Melbourne, from whom the bankrupt was receiving goods in return. 10. I find no consignment account, but the goods were debited to consignees as ordinary sales, the losses appearing as book debts. 11. I find that in the early part of July, the bankrupt received per Rotomahana two shipments ol sugar, 029 Lags, and 800 bags, in all 1429 bags, value in Sydney £1400. This sugar was bonded in Firth's bond on the 11 th July, in the name of the bankrupt, by his *»gent, Mr. Cozens, bond warrants issued to A. Laybourn and Co., on the Kith July. In the bankrupt's bond-book, it is written off as delivered, and it doea not appear in the stock list, or as held by any creditor as security. There is no entry anywhere showing the sale,nor is there any cash or promissory note entered as the proceeds of such sale, and on the 31st August the sugar was still in bond in the bankrupt's name. 12. I find the stock account has at various dates been credited by sales of goods to local purchasers amounting to £5881, of which no particulars appear in any of the books submitted to rne. The items are debited to the various firms as goods, and by reference folio to small journal No. 19, where they again appear as goods, ami I can find no information as to the nature of these goods, nor as to how the particular amount of value is ascertained. 14. 1 find that the books have been kept in such a way as to afford the least possible information as to the business transactions. Large sums are 'paid in cash and by cheque under the head freight, goods, and expenses for which no vouchers have been submitted. Entries in the lodger are interlined, and dates and particulars in Journal No. 19 are riot satisfactory, especially the account of M r. G. Lewis, Ledger No. 5, folio 935. 15. I find pencil entries of wheat received from country settlers, and shipped on consignments, but no particulars arc given. See Ledger No. 5, folios 744 and 804. 10. I find that the discount, wages, and working expenses during the period between 30th April and 15th August averaged £65 per week. This is exclusive of interest on bank overdraft. 17. I find that on the 14th August, 1889, Messrs. Pviissell and Campbell were credited in the current account with £971 for rent, see ledger No. 5, folio 91. 18. I find that promissory notes marked in Bill book as retired by the bankrupt on the 10th August, prior to due date were accommodation bills, hold as collateral security for cash advanced, and the interest of the creditors wa« not in any way prejudiced by their withdrawal. 19. 1 find no entry in books to show at what date the goods in bond were transferred to secure creditors, or that any special cash advances were made thereon.—"iours, etc., Arthur. Hasell. The following letter from Mr. Cozens was also read :— September 5, 1889. Mr. J. Lawson. Dear sir,— your request I give you a statement of my dealings with the bankrupt in connection with a shipment of sugar, per Rotomahana, from Sydney. I was employed by the firm to pass entries, pay freight, &c., and store in bond, and was requested to make an advance on same against bill of lading and bond warrant, which I agreed to do to the amount of £1000, repayable in one month, with 2£ per cent, commission. I bonded the sugar, made the advance—£7oo on the 11th of July, and £300 on tho 15th. Towards the end of July, finding that sugar was likely to drop in price, I repeatedly urged Laybourn and Co. to close the transaction; but was

. informed that prices offered in the local market would not more than clear the advance, but hoped to place the line to advantage in the South. The market again dropped, and I was instructed to sell at best price obtainable. I did so, and rendered account sales on 31st July, showing A. Laybourne and Co. debtors to mc £16 12s 9d. Unfortunately I sold on a sample submitted by Laybourn and Co. on my guarantee. The supar did not equal the sample, and I had to take back the sugar and repay the amount paid to mo for rt. —Yours truly, G. Coxkns. - On the motion of Messrs. Binney and ,A. H. Nathan, it was resolved that the debtor's sworn statement, Mr. Hasell'e report, the debtor's balance-sheet, and Mr. G. Cozens' letter be published for distribution to creditors. It was decided that the next meeting should be held on Thursday next. Sir,—ln Mr. Hasell'B report on the above estate, I notice that my name has been singled out in it under the heading, "In Journal 19, * in which be refers to several accounts as not being satisfactory, " especially the account of Mr. G. Lewis.' Had Mr. Has ell, before making reference to my account iu the way he has done, asked for a statement of my transactions (which I should have been most pleased to have supplied), he would have found that they were of a thoroughly bona jirie character. I challenge him to prove the correctness of his report in so far as it refers to me. I repeat that all my transactions with the firm of Adam Laybourn and Co. were straightforward, opeu, anil above board, and such as no merchant in the city need be ashamed of. —I am, etc., Gaurikl Lkwis.