LOAN AND MERCANTILE COMPANY

New Zealand Mail, 20 April 1894, Page 32

LOAN AND MERCANTILE COMPANY

London, April 11. In tho course of his evideneo before Mr | Justice Williams, Sir James Fergusson said the Company ought never to have taken up anded property, which he considered was outside the Company’s scope. Mr D. Elder was too greedy in his business transactions. The consideration of Ml* Larkworthy’s report was deferred because it was feared his apparent enmity towards certain of the directors had caused tho report to be coloured. Sir James denied that Mr Paul had made any mention of Mr Elder’s report or of his cable message asking that the report lie withheld, pending the receipt of advice, until June, 1893. With regard to the deficit, witness declared that it would bo criminal to conceal ascertained losses, but the Board held that the deficit was onty temporary, and they hoped soon to be i able to recoup the amount. The Company j had always been willing to help Mr Thomas Russell, whose services then and now were invaluable. He admitted that in IS9I certain of the directors declared that tho position of the Company had never been sounder. He was unable to explain the ignorance displayed by the bond-holders in 183 S in regard to the advantage of the conversion. Even tho personal friends of the directors of the Company, he added, had not converted their bonds. Mr Justice Williams remarked that the troubles of the Company appeared to be due

to tho absence of inspection of properties, and it was impossible to think that Mr Paul had informed the directors of tho objection taken by the auditors in their report of 1891 to the misleading description of tho land held by the Company in the Waikato district. His Honor complimented Sir James Fergusson upon the frankness with which he had given his evidence. Counsel for the liquidators of tho New Zealand Loan and Mercantile Agency Company’s estate announced to the Court his intention of opposing the petition respecting the sixth issue of shares. Mr Justice Williams said he was disposed to amend the reconstruction scheme of tho Company with the view of affording somo relief to the holders of unconverted bonds of 1892. London, April 12. The examination of the directors of the New Zealand Loan and Mercantile Agency Company was resumed to-day. Sir Edward Stafford, who was culled to give evidence, said that at meetings of the Hoard of Directors most exciting discussions had taken place regarding the reports furnished by Mr Falconer Larkworthy and Mr David Elder. Ho (Sir Edward) admitted that one-third of the sum divided in 1892 was composed of unearnod interest which had boon placed to the credit of tho profit account. He also admitted that he had failed in his duty as a director in not enquiring into certain items in the balance-sheet. The holders of tho unconverted debentures in tho Company claimed priority or equality with the converters, on the ground that the old prospectuses gave security. Ho had objected to the bondholders of 1892 receiving preference, and ho understood the others were afterwards placed on an equality. Ho regarded Mr Larkworthy’s reports as historical romances. Judge Williams said it was difficult to believe that Sir Edward Stafford had for-

gotten the Company’s manipulation of its accounts. His Honor, speaking in reference to the reconstruction scheme, held that it was clear that that scheme was drawn on the basis of the right of the holders of Baron Schroeder’s debentures to have the whole of the unpaid capital appropriated for their benefit, but in the event of failure this right was very much open to argument, and he required evidence that the creditors were aware of the facts when they assented to the scheme. . He also wanted an assurance from the holders of Baron Schroeder’s debentures that they would grant a further concession if such was requisite, without compelling him to act. His Honor hinted that he might bring pressure t-o bear in the matter, as ho recognised the necessity of disposing of the reconstruction scheme without delay, or it would be a failure. The liquidator stated that there was plenty of floating capital when the Company was restored. The discussion on the scheme'was adjourned till Friday. Sir Edward Stafford, in his examination, said he had strongly objected to the security given to Baron Scliroeder. He admitted that Mr Larkworthy had warned the Board against dealing with the Waikato lands. He added that nine-tenths of the present lock up of the capital originated with the Colonial Boards. Sir George Russell, one of the directors, admitted full responsibility, but said he was unaware of many incidents in connection with the administration of the affairs of the Company. It is doubtful whether Baron Schroeder will make any concession. Melbourne, April 13. Mr David Elder, general manager of the New Zealand Loan and Mercantile Agency Company in Australia, writes to the press,

reminding his friends that the Court at prosent sitting in London is uot yet in possession of all the facts of the case. Ho asks them to suspend judgment in matters whero his name is mentioned until the examination is concluded. Ho says that if necessary he can make such explanations as will show the real facts, and can justify overy one of his actions that has been called in question by the Court. London, April 13. Counsel representing the Creditors’ Committee informed tho Court to-day that it was impossible to extort a further concession from Baron Shroeder. His Honor accepted tho position with regret, and admitted that there was no power to alter tho reconstruction echemo with regard to the security. The sanction of the Court, however, would not affect tho liability of the directors and tho officers of tho Company in the ovont of proceedings being taken. His Honor eventually sanctioned the scheme. Ho remarked that if ho refused to do so he would only punish tho weakest bondholders. Judge Williams, referring to the caution displayed by Sir Edward Stafford, said he had evidently mado commercial euphemism a fino art. Sir George Russell admitted that tho directors had been neglectful personally. London, April 14. A HOPEFUL OUTLOOK. Mr Justice Williams said he sanctioned the reconstruction schemo, bolieving that the Company would bo successful in the future if those personally interested would cordially support the scheme. Ho was not satisfied that tho schcmo treated tho unconverted holders with injustice. He recognised that the holders of the sixth issue had boen deprived of rights of priority, but not sufficiently to justify him in the refusal of the scheme. Sir John Gorst stated ho had not noticed irregularities in tho report of 1892, and he accepted tho responsibility. Ho admitted that Mr Thomas Russell was unable to meet his liability at the time of the transfer of the shares, as ho was hopelessly insolvent. The Court adjournod until Thursday. THE NEW BOARD AND ITS POLICY. The new directors of the Company include Mr Martin (of Turnbull, Martin and Co.), Mr John Beaumont (formerly of Christchurch), and Mr W. W. Oswald. Tho directors intend to increase the frozen meat business and to advocate a scheme of immigration of farmers with small capital. It is expected that they will apply the pruning-knifo in dealing with the encumbered properties. Sir John Gorst said it was extremely wrong for the Company to insert in the profit and loss account of 1892 a portion of the suspense fund, also interest which was not earned. The Times states that it is safe to assume that the Company is certain of reconstruction, and it is expected that the New Zealand Government will assist the emigration scheme. Auckland, April 14. The general manager of the Loan and Mercantile Agency Company has received a cablegram confirming the cablegram published by the Press Association respecting the construction of the Company being sanctioned by Judge Williams. The speedy incorporation of the new company will now follow, together with the resumption of business at a reasonably early date. Auckland, April 10. Tho General Manager for the Loan and Mercantile in Auckland states that all the colonial creditors and shareholders having been consulted previous to tho meeting held on the 20th February, no further meetings will be required.