THE LOAN AND MERCANTILE AGENCY COMPANY.

Otago Daily Times, Issue 9982, 26 February 1894, Page 3

THE LOAN AND MERCANTILE AGENCY COMPANY.

MEETING OF CREDITORS AND - CONTRIBUTORIES. (From Oub Special Correspondent.) London, January 13. The meeting of creditors aud contributories of tho New Zealand Loan and Mercantile Agency Company, convened for last Tuesday, duly took place, but proved absolutely resultless. There was a good desl of somewhat undesirable " laundry " talk which could have no possible benefioial outcome, but which might materially damage tho company's prospects, and so injure those who so imprudently indulged their personal feelings of resentment. Ultimately both meetings were adjourned until the reconstruction scheme should bo ready for presentation. It seems to me a pity that the meetings should hare been held at all until the scheme could be discussed. What makes the unsecured debenture-holders so "mad" is that they had the opportunity of converting their debentures into secured stock, but did not bother to take advantage of it. Thus it is because they are so wild with themselves for their omission that they now strive to prove misrepresentation on the part of the directors. Thero was much talk about litigation, and one excited sufferer even spoko of " prosecution," but this is mere moonshine. There would not be a leg to stand upon.

What they complain of is practically this— that when the offer was made to them in 1892 to convert their principal debentures into secured debenture stock, they were not warned that unless they) did so they would be mere unsecured creditors with no lien on the uncalled capital, and with all the debenture stock preferentially in front of them. No doubt

it was a pity that more explicit information was not furnished on this head. Still, as Sir James Fergusson not unfairly put it, this information was open and available to every debentureholder who chose to take the trouble to seek it, and it was not the bounden duty of the directors to run after nil the debenture-holders and force upon them information which they could get for themselves if they choso.

Nay, more than this, when some of the deben-ture-holders did ask for information and received replies to the effect that as matters stand they possessed no specific security, whereas by converting into debenture stock they would have specific security, that ought to have been plain enough one would thiuk. But exception is taken by the official receiver on the ground that the statement should have been not

"You possess no Specific security," |bufc "You possess uo security." With due deference to the official receiver, I venture to point out that such a statement would not have been literally Eccurate. It is true they had no security specifically allocated to their claim—which is what was told them—but they still had as creditors the implied security of a claim on what was then a very valuable business and much substantial property. Therefore surely the statement made was moro strictly accurate than the one suggested.

Where the sting lies i«, of course, in the fact that the debenture-holders aro conscious now that they were careless, and jumped to raehconclusions when they ought to have thoroughly ascertained how they stood, in which case they would assuredly have converted at once. They had an investment jielding good interest at a

time when Buch investments were noue too plentiful, and they did not care to disturb it if

they could help; and so they "let things slide," with the result that they flnd themselves

out in the cold."

At the same tiipe, if they do not ruin their own chances by indulgence in mere vindio-

tive litigation, they have n very fair prospect of coming out all right in the long run. As tbeir own counsel pointed out, the very notion of litigation is absurd. They havo not a leg to stand upon. The deed on which they relied as giving them Eecurity is ruled to be a mere "covenant to pay." The deed of 1892, under which tha debenture stock was secured upon the uncalled capital, is pronounced flawlesß and unassailable. In short, Mr Harold Brown declared emphatically that litigation to upset the deed could not possibly succeed, and even if it did would be fruitless.

Sir James Fergusson, who spoke on behalf of the board, evidently felt keenly the reflections which had been cast on tbe directors, and said that as a man who had stood honourably before the world for many years he had no desire to evade any responsibility or to escape behind any subterfuge. He pointed out with much force that the directors had done all they could to induce the terminable debenture-holders to go with the conversion scheme. This, however, was merely re-irritating the sore place. 'As I have said, what " riles" the malcontents is that they had tho chance to secure themselves—were absolutely offered security, and did not take it. What they would like to do would be to punch their own heads for their folly.

And after all, now that this steam has been blown off and the position cleared up, I thick there is reason to hope all parties will pull together and settle the scheme of reconstruc-

tion under which alone can everybody except the secured creditors escape a heavy loss if not dire disaster. I can hardly bring myself to believe that a number of shrewd business men will perform the foolish feat vulgarly known as " biting off the nose to spite the face." Having vented fully their not unnatural feeling of resentment at finding themselves in such a

"hole," they v.ill roost likely come to an amicable agreement to let bygones be bygones, and will unite their efforts to place this flue business fairly on its feet onco more. Jn the interests of New Zealand as well as of all personally concerned it is devoutly to be hoped that this will be the case.