BUILDER'S FAILURE

New Zealand Herald, Volume LXXI, Issue 21880, 16 August 1934, Page 14

BUILDER'S FAILURE

OPERATIONS IN NORTH LOSS ON HOSPITAL CONTRACT "EXTREMELY BAD LUCK" [nv TKLKGRAFH OWN CORRESPONDENT] WHANGA&EI, Wednesday Tho affairs of Alexander Young Provan, a bankrupt building contractor, of Whangarei, werti investigated to-day before Mr. A. L. Tresidder, official assignee. The schedule showed £."070 owing to secured creditors, and £3329 to unsecured creditors. Tho total assets were set down at £5151, leaving a deficiency of £l2lß.

In his statement bankrupt said he commenced building in 1919 with a small capital and until 1927 mado considerable profits. His books were properly kept. In 1926 ho made a profit of £1654 and his drawings for the year were £338. The surplus of assets at that time was £4250. In 1927 he acquired plant to tho value of £735 and land and buildings worth £2574 and was ready to engage in largo contracts.

From this time competition became very keen and for each of the succceding years, said bankrupt, ho had to draw on capital, although each year showed him to bo solvent. At March 31, 1933, his capital position showed a surplus of £lsll. Heavy Loss on Contract

At the end of 1933 he obtained tho job of dismantling the hospital at Mangonui and re-erecting it at Kaitaia. For reasons beyond his control he lost heavily on this contract, which was the cause of his ultimately having to file.

The reasons were, firstly, the extra expense caused by the delay on the port of the Public Works Department in transporting the dismantled building, continued bankrupt, and, secondly, his son became dangerously ill. For threo months the doctors advised bankrupt to remain in Whangarei to be near him and, in consequence, bankrupt left the contract in charge of a foreman when with work of that kind it was essential to give personal supervision.

On May 25 ha assigned £6OO of the Mangonui Hospital contract moneys to a firm, who had advanced him £2OO in cash with which to complete the contract, making his total indebtedness to that firm £994.

Concluding, bankrupt said that in all his contracting he had only had one substantial loss and, generally, his tendering has been very close to that of other reliable contractors. Effort to Preserve Assets

The assignee said the matter they had to solve was that in the last 15 months bankrupt's surplus of £lsll ■had vanished and he had a deficit of £1248. The personal drawings had at all times been reasonable. It was stated that bankrupt had a plant capable of carrying out contracts to the value of £30,000 annually, but latterly there had not been that amount of work in the whole of North Auckland. Bankrupt had had to hold on to preserve his equity in .the assets and any attempt to realise on them would have left him in the same position, as no reasonable market was available. Bankrupt had estimated to make £4OO to £SOO from the hospital con : tract. The assignee said the Public \V orks Department supervisor required certain further work to be done in connection with the hospital contract and it was necessary to complete it in order to obtain the extras, which amounted to a largo sum. The Hospital Board offered to complete the work itself, provided creditors agreed to a deduction of £SO from the contract moneys held by the board.

Excellent Set of Books The creditors unanimously agreed to the proposal. Arrangements for the disposal of bankrupt's assets were considered. The official assignee said that, judging from the statements of three of the creditors from Kaitaia, bankrupt had been too confident in the hospital contract, but he did not think it fair for creditors to attack the balance-sheets made by a qualified accountant, which disclosed bankrupt to have been quite solvent when he commenced the contract. "Bankrupt is to my knowledge a great worker," added the assignee, "and has had extremely bad luck. During my whole experience I have never had a better set of books placed before me." A resolution that bankrupt s discharge he facilitated was carried and the meeting was adjourned.