TWICE BANKRUPT.

New Zealand Herald, Volume LXV, Issue 20076, 13 October 1928, Page 14

TWICE BANKRUPT.

UNUSUAL LEGAL POSITION. FIRST CREDITORS PREFERRED FULL REPAYMENT AVAILABLE. AIDING THE LESS FORTUNATE. The action of George Wilcox, garage proprietor, who recently went bankrupt in Ashburton without having obtained his discharge from a previous Auckland bankruptcy, has given rise to an unusual legal position. At a meeting yesterday at the offico of the official assignee, Mr. G. N. Morris, it was made quite clear that legally in such a caso tho creditors in the first bankruptcy take entire precedence over those in tho second. The mooting was attended by four creditors in the original Auckland bankruptcy, and by a representative from Ashburton of the Canterbury creditors in tho second bankruptcy.

Wilcox, as a taxi proprietor, failed in Auckland in June, 1922. The claims proved against his estate at that time amounted to £503, and his assets realised £2. This year, while still undischarged, he was again adjudicated bankrupt at Ashburton, where ho had been carrying on business for two years as a garage proprietor. He was subsequently sentenced to three months' imprisonment for obtaining credit without disclosing tho fact that he was an undischarged bankrupt. The liabilities in the Ashburton bankruptcy amounted to £6354. The assignee there had realised £BIO, and he hoped to realiso a further £250 from book debts. If the Auckland creditors took tho full sum to which they were entitled, only about £250 would remain to bo distributed among Canterbury creditors who had proved for £6354.

Auckland Creditors Benefit. "This is the first caso in my experience in which Auckland creditors have benefited from creditors in any other part of the Dominion in this way, but there havo been three cases in which Auckland creditors havo lost to creditors elsewhere," Mr. Morris said. "These cases, however, have not been on all fours with this one, in which 20s in tho pound is available. The others were small amounts." Mr. Morris said that on behalf of the Auckland creditors he had claimed £756, being the amount of claims in the estate, costs and commission, and interest on the claims from 1922. The assignee at Ashburton found this was a legal claim, and a meeting of tho Canterbury creditors appointed Mr. A. S. Nicholls to represent them before tho Auckland creditors and to ask for some concession such as foregoing interest. Mr. Morris said he was not in a position to make any concession unless the creditors were unanimous. One creditor had told him he did not feel he could make any concession. Mr. Nicholls said ho was awaro ho had no legal standing, but tho Canterbury creditors had felt the legal position was not quito fair. Ho had learned that morning that Wilcox's Auckland creditors had "fallen in" as badly as they had done in Canterbury. Mr. Morris was quite right in saying tho creditors in the first bankruptcy were entitled to the full amount and interest at 6 per cent. Speaking equitably, the money in the estate was not the Auckland creditors' money, but money collected out of assets that had been "bought with Canterbury creditors' money.

Creditors Forego Interest. Mr. Morris: I could have seized any of those assets at once, bad I known. Mr. Nicholls said that in the list of Auckland creditors there were four companies that were defunct. Mr. Morris: I havo.no direct evidence, but I daresay that is so. Mr. Nicholls said that money would go to the Government, but he hoped to get a resolution passed that would help the official assignee to get it for the Canterbury creditors. He suggested the Auckland creditors should accept 10s in the pound, which would give them a fair dividend, while allowing the Canterbury creditors something less than 2s in the pound. 110 could only leave it to the creditors. If the Auckland creditors were in the same position as the Canterbury ones, what would they do ? A Creditor: The samo as they did before.

Mr. Morris: They have always given way in my experience, although I do not know of any previous case in which there has been full payment. Ho expected the position would arise that certain of the Auckland creditors would be willing to forego something while others would not. The Auckland creditors present indicated their willingness to forego the interest to which they were entitled, and 011 the motion of Mr. A. E. Warnock, seconded by Mr. F. I). Pidgeon, the following resolution was adopted "That creditors at the meeting acting unanimously and ns an act of grace, are prepared" to and will refund to the official assigneo at Ashburton the full amount of interest paid on their claims and recommend that creditors not present should do likewise."

Mr. Morris expressed the opinion that tho other creditors would fall in with this suggestion.