HOTELKEEPER'S LOSSES

New Zealand Herald, Volume LXIII, Issue 19376, 10 July 1926, Page 14

HOTELKEEPER'S LOSSES

OVER A THOUSAND A YEAR. EFFECT OF KAURJ GUM SLUMP. LACK OF CAPITAL ALSO BLAMED. "Well, that is not bad," said the Official Assignee, Mr. W. S. Fisher, at a meeting of creditors yesterday in the estate of Percy Michael Mills, hotelkeeper, after it had been calculated that bankrupt's position had gone back to the extent of approximately £3900 in about two and a-half years. Bankrupt's schedule showed his assets is £7130 and his liabilities as £6502, leaving a nominal surplus of £628. The amount due to unsecured creditors was shown as £1864 and to secured creditors as £3938. In addition there were a number of small unsecured liabilities, in eluding £3OO for wages, which totalled £7OO. There was also an additional claim for £IOOO which was disputed. The assets consisted of a property of 100 acres at Waipapakauri with a hotel of 18 rooms, a bakehouse, general store, and four-roomed cottage, valued at £4500. Improvements to the buildings were valued at £IOOO and furnishings and fittings at £IOOO. It was stated, however, that the property had been sold since the drawing up of the schedule, and had realised only sufficient to pay the secured creditors. Live stock was ''allied at £l7O and book debts were estimated to produce £3OO. Bankrupt said his position was due to the decline in the value of kauri gum and to having to spend £BSO on the hotel. It was in such a state of disrepair when taken over that the Licensing Committee demanded extensive alterations. He was not able to borrow any money for improvements and the mortgagees gave no assistance. Examined by' the assignee, bankrupt said he took over the hotel in October, 1922, taking over the mortgages and giving an equity of £llsO in a house in Wellington. He had £2OO in cash and ' borrowed another £2OO to enable him to carry on. He bought the hotel on the representation that the profits would be £IBOO a year. For the first seven or eight months the takings averaged about £BS a week. The profit would be about 100 per cent., or £4O a week, making approximately £2OOO a year. After about a year the trade began to defcline owing to the fact that the gumdiggers could not sell their gum. The assignee remarked that bankrupt had gone back to the extent of £3900 in two and a-ha!f years, or over £IOOO a year, losing his equity of £llsO and his £2OO in cash, and incurring liabilities to the extent of about £2500. A creditor said bankrupt had been handicapped by lack of capital and having to pay a high rate of interest and had got back nothing of what he had put 'into furnishings and renovations. After discussion a committee was appointed to act with the official assignee with power to dispose of the assets by private treaty or otherwise.