WINE MERCHANT FAILS.

New Zealand Herald, Volume LX, Issue 18534, 19 October 1923, Page 5

WINE MERCHANT FAILS.

I HEAVY LOSS DISCLOSED. ! COURSE OF THE; BUSINESS/ EXAMINATION OF BANKRUPT A Meeting of creditors in the bankrupt i estate of John" George Rutherford {Mr. ! Finlay), 'wine and spirit merchant, of Auckland, was held yesterday afternoon, the official assignee, Mr. WS. Fisher : [presiding. Some 30 creditors were present or represented. Mr. tfaxd represented the National Bank. ■ . Mr Fisher said: that since ; meeting.. '• held on ; October 3 bankrupt's license had been sold to the highest of three tenderers for £325. In addition, the bulk of bankrupt's stock, seizod under- a bill of sale,-t; ;f had been sold by auction, for £134. There ■ were, said the assignee, 161 creditors. Bankrupt's schedule arid stetement~-a summary of which was published in Wed- • nesday'sHEßALD—showed total i; debts at ' £11,051, which £8392 is five to. unsecured - creditors -Assets; ; we?e , shown -," ' • at £1776, leaving a deficiency of , £9275. Bankrupt attributed his; position partly to; the . action of the National Bank;; mv;,/ restricting his operations by \ refusing to .. , honour certain-cheques and in finally ad- \ vertising certain of his goods under a, writ V .' of sale. He suggested" that if allowed to ' continue the business i with proper t; backing he could show a, net profit; of £2500 by"the end of March. Ho would aUept: ::; living expenses in the meanwhile, v ;'• - Figures for Three Years': Trading. .• \. Mr. Fisher read from three balance-* -r 'tweets put in by" bankrupt; for the years ended March 1921, 1922 arid 1923, the gross profits being shown at £10,165. * • £4569 and £5042 - respectively. Other . ,-. details for the same years weYei:—• , - head expenses, £6690,• £6210, £5393 ;■■.". drawings, £344, £919, ' ■:£197;-: capital, £6351, w £5658, 'deficit'of £234; travelling '■? expenses, £1197, £892, £562; salaries, >:; etc., £1950, £1667, £1455; interest paid, £145, £520, £636; general expenses, £559, £630, £291 stock held, £3834. £8200, ;'i;' £7300; amounts due to the bank'. £1857, ; - £2547,; £5523 ■■ -v./ .-'.'...,.'. , Mr. • Fisher said the figures showed - bankrupt's position at the end of the : V ; ;i- .: ; three periods >to -.-'. be -as follows First '; : period, .profit £S?;)i8; second ; period, ulosa / v £2189; third year, apparent loss £1356. ' The ; actail loss in the last year, said the : '"' ■ assignee,, was, £2356, because bankrupt! had inert ised'{'*•«* value.of his goodwill by. £1000. /--,- He would probably be able to v■' explain why. '' / : . •■ \ ' ■ iv' veply to -ciestiojjs, bankrupt said ho iijhad bf.i,i in iiquor trade for 17 or 18 " ■: years. Ju?.t p.'ior to starting his business - he had: been travelling- for:'a-/wine and ! - : '.' spirit mercharir;,: He ; then -had £750 ' " capital, as did his partner, Neither, had ' any liabilities, His; partner looked after-' f the cellar work •'. and bankrupt travelled * for the firm. /There was no deed 'of part- ■ nership drawn up, land his partner left +■ after about two yew': The business ,had been very prosper;- indeed, ; ; Bankrupt bought : it;, from ,k.„ retiring; parte ar * for ';. .'■'■: £2000 0Qv;; : -i. ii.is sum was advanced -by ■■:-■ a manias a private loan. . The .amount r did not go throuffh bankrupt's books be- . cause the lender did not demand security.'' Debt of £2000 Not in Balance-sheets. The Assignee: When did you start to' show that liability i:. your, books? ' Bankrupt: About April, ■ 1922. ' • Why did you show ;: it then Because ■ security had to be given. ■ Did this account for , the reduction of your capital from £3658 ; in? 1921-22 ;to a deficit of £234 in: 1922-23?— Not alto- ' gether. , The year's trading showed" a ' los? ' . ~.'. .-What was your, reason for increasing the value of your goodwill ■ bv £1000 after ! a bad trading The licensinc »,oil being over, I considered the value to" be increased; to that extent; "> . f: Asked why ''he. had not curtailed ex- ' | penses when his accouafs began to show .> - • a reduction, bankrupt said it was '. because; i.he .could v;get; no satisfaction from the , j. bank. ...■/--His increased drawings in the period ended March, 1022, were accounted • \ lor by extra expenses for,; sickness, operations, etc. Furthermore, a sum of £400 .had, been expended-in paying off an overI draft on his/ private account. The busi- ' • j ness could not have been run cheaper than ,it had been run. ; When he saw the : re- ' : | suit of/the year's- in March, ig22 ' ' f 1 and, again in 1923, he; did not: consider his position. a bad one, or that he ought to put his house in order." - - J.-; Mr, Fisher: Did the tank at"any time ' indicate that it would let /you-trade in- - definitely ,on its money?.. ',' ~"'■ Bankrupt: The bank never' laid down' a ..definite; policy. ,-.>•- ;. Played the Game with the Bank. " Then what led you to assume that you " i could gq on trading indefinitely with the : >

bank's money? t : i; Because I had access to bond warrants which I could convert at auy time. ' - And because you had 'those bond ; warrants ; you thought the; bank - should '' have ''■ gone on advancing you capital with -which v ' to / trade ; — Yes, as long; 'as-' . it'. had' >"'•'' r security. > • r v Do you think your t«Hmcnt'.of the bank hs always been satisfactory '?—Yes I have always " the game" by the ■■ bank. J Is it not a felt that you obtained from ■'':■ the .bank a;, number of ■• biid warrants ; " ; ' under a '< solemn promise that, when you ' "/// , sold the subject? of the bond warrants you would -pay-; the money : ; received into : /- ; I the bank Yes. - j And did yon pay in the money far ' " ":'■ as I could. ; The bank'- kept « oollarine" ' r my money. -~ . ~.; h , It was T the bank's money.—No, say mjncy. (Laughter). . J > ' T .., i'ou do not seem .to know the ; diff»r- '■'• euco between rneum and I: tTium.—'Kiahfc ■■■'■' you. •««•*». / Have you.been selling at cutting rates? ~ .;... Mr. *inlay (ror bankrupt) V The licensed victuallers say that. He had' been making about 86 per cent, profit and they thought that was no ! good.- ! A Creditors If he made 86 per cent, ' profit, where has if gone?.' ■"■.•.'./.-.- : J Mr.-. Finlay. There "were'special reasons' ■ why he went back in the last two years, but, i ; before that he was: making a profit - - of 86 per cent. " »,,-> ;•■,•/ .'- ■. . ■'-' ! Bankrupt was closely cross-examined as to various business transactions. He v •denied that he was insolvent last March,and said he thought: he could make the, business show a profit now, with proper. : trading facilities. ; ; ■ 1% '~.*-. ~'"'• ! Mr. Ward put in a statement showing:: |' that, bankrupt's overdraft at. the bank at l : various dates stood at the following figures:—March, ; 1921, £1840; September,- >■-■- ' 1921, £1997; March, 1922, £2525; Septem-'■".' ber, 1922, £4825; March, 1923, £6057.. -■■ . * Comment by tie .Assignee. i. ' '; Commenting upon the -case,, the assignee', ■■■■'.' remarked that, there .were some very ~ sinister aspects. One 'was the -bankrupt's inflation- of the goodwill after the. business had made a very heavy loss. Then ■'" ; there was the matter of the liability of : '".' £2090. on, the private loan riot having been shown on the balance sheets which were, ! presented to the bank from which bankI r«pt was getting accommodation. Another ' matter was that bankrupt : claimed to be a business man, yet, when ;he had -. reached a point of absolute 'insolvency, it had never occurred to him as being the only proper, course, to pursue to•■ consult his creditors. Instead he had gone en and got deeper into ; the": mire. ■Also it ' was at this period when, as an intelligent business .man .he., must have . bead aware -' that he had reached.an extremely'critical ' position that-bankrupt'had -opened an account with a firm and \ obtained, ; goods on credit on which £500 was still owing. motion that the facts be placed -be- - r ' fore the j Crown .Solicitor with- a view to prosecution was'' moved, but found; no >■: seconder. ,-;' ,* %i behalf of /bankrupt Mr, Finhiy/said ■ .'■ ■ ■ there was a small; prospect of .Rutherford' ■ , "getting on' to' his feet again. -In that ; case he would pay what he. could to his creditors. ', • . ■ _ A resolution asking the assignee to have an investigation made of. bankrupt's ac- . counts from March last to She date? of hits: . bankruptcy was carried. ■ -/ : -:X/;;/.'-/