LIQUIDATION OF A MASTERTON FIRM

New Zealand Times, Volume XXXII, Issue 7319, 24 December 1910, Page 1

LIQUIDATION OF A MASTERTON FIRM

COMPULSORY OR VOLUNTARY ? DECISION OF THE SUPREME COURT. Litigation as to whether the Masterton firm of J. D. Cruickshank and Co., Ltd., . should bo compulsorily or voluntarily wound up was concluded in the Supremo Court yesterday by a judgment of his Honor Air Justice Cooper in favour of tho latter process. Johnston and Co,, Ltd., of Wellington, shareholders in the company of J. D. Cruickshank and Co., had petitioned that tho firm should bo compulsorily wound up. At the time tho petition was filed the company hail taken some preliminary stops to wind up voluntarily. Since then the necessary resolutions had been passed and a Hq'uidariir appointed. An offer by George Homy Perry to take over the company’s business as a going concern, discharging certain liabilities, had been accepted. Petitioners believed that if, in the course of voluntary liquidation as proposed by the directors, tho agreement with Perry was carried into effect, the result would be a serious loss to tho fully-paid shareholders and, in any event, a serious injustice to them. In tho event of the company not being wound up by the court they asked for such other order as might, in tho circumstances, be considered just. QUESTION OF TANGIBLE VALUE. His Honor in the course of a lengthy, judgment said he had to determine whether petitioners had established a sufficient interest to support the petition, or, in other words, if the affajrs of the company were com pul-orUy liquidated would there be a surplus, and,' if so, whether the share of such surplus would bo of tangible value lt> tho petitioners? After referring to details concerning the establishment and business of the company, his Honor said ho had come (o the conclusion that if there was a forced liquidation there were ' substantial reasons that not only would there be no tangible surplus even if tho uncalled recoverable capital was collected, but there would be a real danger that there might be insufficient to pay the creditors in full. He was of opinion that petitioners had not sustained tho onus which was upon them, and their petition must be dismissed. DISPOSING OF THE BUSINESS.

Dealing with a motion for an order 1 that tho liquidator ,be at liberty to | sell, convey and assign to Mr Perry all the assets of the company on the terms of the agreement made, his Honor, after analysing the position, said the., fact that certain paid-up shareholders supported the proposal indicated that they were satisfied that they had nothing to gain by its rejection and* that it was the most satisfactory means of discharging the obligations of the company to its creditors. The .obligation-which Mr Perry would t undertake if the proposal was sanctioned was a relevant matter. No doubt his desire was partly, to save himself from further loss, but ho also wished to see the creditors paid in full. "He has some .£3OOO at stake,” said his Honor, “after setting off the amount for which he is liable as a 'IP shareholder, and he has also to find in cash under his proposal an additional sum of nearly -£SOOO. . In my opinion, but for the largo amount ‘he ha? at stake he would not have made the offer, and I am clear that no such favourable offer could have been obtained from any other person. The petitioners have definitely refused to entertain a purchase by thorn of the assets of t tho company, and Mr Cbennells (the liquidator) has sworn, and I think, with good reason, that he would not as liquidator be justified in taking the responsibility ■ of carrying on the business of the company for the purposes of a. gradual realisation, the nature of the stock and book debts of tho company being such that an indefinite time would be expended in realising the wane. Ho has also sworn that, in tho circumstances, and treating the rights of the creditors as entitled to the first consideration, he should in the exercise of his own judgment accept the proposals of Mr Perry as tho only safe course to pursue. That is my own opinion found after a fall consideration of all the evidence placed before me, •and, therefore, I feel j ustified in holding that the court ought to sanction . tho proposal and I order accordingly." COSTS, His Honor said ho must order the petitioners to pay a reasonable sum for costs. It was, entirely unnecessary for tho paid-up shareholders represented by Mr Logan to appear. Th*jy had no possible interest in the petition. The creditors of* the company were entitled to be heard, as their interests wore in question and they were also interested in supporting Mr Morison’s motion. He •allowed c£s 5s costs to . tho parties represented by Mr Morisou and tho same amount to th-oss represented by Mr Von Ilaast. This he considered was a fair and equitable manner of dealing with the question of costs. Mr H. D. 8011, E.C., with him Mr H. P. Johnston, appeared for the petitioning creditor, Mr C. B. Mo risen. for the defendant company, Mr 11. F. Von llnast for forty-three opposing creditors, and Mr I). K. Logan for eight fully I paid-uo opposing shareholders.