W.H.KEAR'S BANKRUPTCY

Otago Daily Times, Issue 14683, 17 November 1909, Page 3

W.H.KEAR'S BANKRUPTCY

THE SOLICITORS' EXPLANATION. Tlio adjourned meeting of creditors in the. citato of William Henry Kcar, of Duiicdin, pastrycook, was held at. the office, of the Official Assignee yesterday afternoon. Mr W. Downio Stewart appeared for several of die creditors, and Mr E. Aslin represented tho bankrupt, who was also present. Fully a dozen creditors attended the meet-

ing. The Assignee said creditors would remember that at tho last meeting certain matters came out in evidence, and certain statements wcro mado from which it would appear that some fivo 31 six months beforo Iho bankruptcy two of the principal creditors, who had started proceedings for the recovery of their accounts, had been induced to.hold their hands because of certain representations made by debtor's solicitors, Thcso creditors now complained . that the position was not. fully explained to them, aind that if it had been they would havo refused to stay proceedings; and it was now apparent that as a result of the staving off of bankruptcy proceedings one creditor for a, large ainount had been preferred, and a very heavy loss to the estate had resulted. Ho understood that the (solicitor in question had a statement to make which ho said would put a very different complexion upon affairs. Mr Aslin then mado the following statement:—"ln connection with tho statements mado at. tho meeting of creditors held last week we desire to mako the following Tcply -.—First, as to withholding tho address of Mr Kcar. This was never absolutely refused. Wo simply asked creditors to not press the question, seeing that Mr Kcar was seriously ill and threatened with a nervous breakdown, and consequently totally unfit to bo worried with business matters. To show the truth of this, our Mr Aslin, when visiting Oamaru in July, had again and again to refute the statement that ho (Kear) was in a mental institution Secondly, as to carryung on of the business by the trustees when it was known to bo losing. Tho figures show receipts for May (part month), iJ93 ss; payments, £36 8s; Juno receipts, £181 14s lOd; payments, £147 5s lOd Heaving £91 6s to the good after wages and petty expenses were paid. On July 6 tho lease was placed under offer to Mr Stark. The principal creditors wcro then called together, the matter explained .0 them, and they then agreed to continue, and appointed Messrs Moss amd Speight to act. At this meetin" wo said tho business appeared to bo nearly holding its own, except perhaps tho rent. We then hold £136 10s 6d m hand to meet Juno expenses. It was not until the Juno accounts camo to be paid on July 20 that Iho loss first appeared. The offer of £200 was then standing To have closed down would have meant tho loss of this. Thirdly, as to withholding the fact that we had a mortgago to 6ccure costs. This wo have already dffliicil. Wo distinctly stated in May that wo could not guarantee anything unless wo were indemnified against joss. Wo have referred to our diary and letter-books, and find our statement confirmed. The documents were sent to the solicitors of ono of tho largest, creditors for perusal. But, evon if true, why should wo not bo secured? Who cvor would guarantee accounts without security? Besides, we hnvo paid every account since May, and find the following amounts in tho accounts rendered to tho Assignee as paid by us:— Shiol and Co., £81 Is sd; W. Taylor and Sons; 4140 15s sd; flourmillers, £82 15s 9d; T. and P. Milk Company, £31 6s; Speight, Justice, and Co., £26 lis; A. and J. M'Farlane, £94 Os 8d; Rcilly, Scott, and Gill, £31 18s 9d; and Elliott Bros., £37 18s 6d. What have we received for costs and oxj>en6cs during that period? So far practically nothing. These creditors and others have their cash. We the security only. We think this will clearly show our connection with this matter, and relievo us from the imputations sought to be levelled against us." . The Assignee said that bankrupt, had turned up that morning, and had mad 6 a statement upon oath, which he (the assignee) would read. The statemnt was that, until October last, • he had been in business in Oamaru .is a painter for 14 years.' Ho started there without capital, and when he left ho had sufficient money and property to render him independent. He reckoned that he was then worth between £1600 and £170 C In October last he purchased from a syndicate known as Simpson nirl parly the lease, the stock and plant, and goodvill of tho confectionery business started by sea'"le iiik! iSbcrliardt, at the corner of Moray place and Princes street. Tha pries agreed upon' was £500, of which lie paid £250 cash, and gave a bill for £300. Ho aoltovoJ i.e lost from £80 to £100 during the first month, and there was a heavy loss during every subsequent month. The worry and anxiety o' this continual loss made him thoroughly il! and produced almost a nervous breakdown, and ho went away to Waitati for a change about April last. Ho camped there for about ihrce weeks. The climax was brought about, by the syndicate

•ofusing to allow him an extension of time to cnablo him to meet the Dill of £300, after giving him to understand that they would probably do 60. Towards tho end of May he returned <o Duncdin, where he stayed for about u .fortnight, living at-his own house in North-East .Valley. This houso'was rented to him just before ho returned from Waitati. Ho was practically living Ihero for about s.cven weeks, until ho took up a bush section at Glcnomaru. That was about July 3. Speaking generally, ho had been in Glenonmru ever since. About tho beginning of May he arranged with Mr Aslin to allow Mr Mutton 10 days or. a fortnight in which to call for tenders for the business in Princess street, and to wind up accounts. Mr Ilutlon induced Mr Aslin to allow an extension of time, as ho asserted that he had a purchaser at £600. When ho loft, for Waitati he had little doubt that the whole thing would be closed up within a week. Ho was very ill at the time, and at Mr Aslin's suggestion he gave him ,a power of attorney to cnablo him to act on his behalf. He also had a small confectioner's shop in C'argill road, which he carried on for about eix or seven weeks. That business Mr Aslin closed up as soon as ho came on the scone, about May Bor 9. Tho small stock that was then there was transferred to Princes street. Tho account book he sent in was the only book he kept, except tho bairk book. It was a cash business, and, therefore, ho did not think any elaborate books wero required. Ho swore that up to the time he went away he paid everything into the bank, except a small amount required fpi. private house accounts. During that time he spent notlvng on himself. Tho cash book tliowe:! roughly all receipts during tho tjme he carried on the confectionery business, hut it showed only the cash expended over the counter. The only record of expenditure outside that was the bank book.

Replying to Mr Stewart, Bankrupt said he found ho was losing heavily almost immediately after ho started, and the creditors were called together in May. Although cL f(,,md ■'« ''ad mado a loss of between £80 and £100 the first month, lie was financial, and Mr Hutton, from whom he bought he business, assured him that ho had made he loss on account of the way the business liirJ run down t.ml the excessively wet month. 1I» bad to do a lot of repairs to the premises. The loss kept on, though not to such an extent. Although ;hc takings seemed to be a good deal more, the

xpenses were a good deal more. The. business was a leva right from the start, •Mi- btewart: Had you wound up when the creditors were called together, there w.ould have been enough lo pay everybody ■Bankrupt: If you pay attention to the statement you will see there was good reason for not winding up. My instructions Id Mr Aslin were to give MrJlutton sufficient time to otter the goodwill and lease of Mie.prcn.iec9.

;Mr. Stewart: Did you contemplate that the business would be carried on for three uionths?—No, by no means.

•Mr Stowart: Did you no* think that, as you were losing heavily every month, it'would not be long before you lost more than the value of ihe. lease?— Quite true; but Mr Aslin ..n-d Mr Hutton thought differently. I was absolutely run down with anxiety and worry, and Mi Hutton had l>ceii trying to make out I had not run the business upon right lines. Mr Aslin N1 '(l ii someone else was put in for a while the business would hold its own, and •aid I had -,io objection to that course. Mr Stewart: You agree with me it would nave been better for all parties if the Msme-s had been wound up?-I don't know i"at it would. You would have lost the goodwill. aiul fhat . sort of ~n i Mr ..teivait: You know that a lot moro >?s been lost than the goodwill and the WOO, whilst the goodwill realised £200. Jlr Stewart: You knew that a meeting I don t think I did ' Yei r bu! 0 r, t \ irOU h »™i"»Kl *i»ee?- ™" in "™<™bcr that anvthing was old ir,o at the time. l wcnt f or that .he sale would bo effected to, £6CO I have not pulled myself together yet A. jnonth ago I could not bear" mention of tho business, aqr did I open Mr Aslin'* letters

Mi- Slowarl:' Do you remember signing a mortgage in favour of Mr Smith for £300?-Yes.

Mr.Stewart,: That- was ->ver your Oamani property?— Yes.

Mr Stewart: You were anxious to secure for Mr Smith the payment, of bis money?— Nothing of the sort. If there was anyone. I was anxious should low, it. was Smith.

Mr Stewart: Don't you think you look tho best means of making him win?—l took the best advice' I was advised to sign tho mortgage.

.Mr Stewart: Were you advued what tho effect of signing the mortgago would be if bankruptcy ensued?— No.

Mr Stewart: Did you realise what tho elfcct of it would be?—l was not. capablo of realising very much about if.

Mr Stewart: I. want to know if you were aware that giving Mr Smith tho mortgage would haw the effect of putting him in front of tho other creditors?—l knew ho would Im placed in front of the oilier creditors, but my property showed about £700 beyond that.

Mr Stewart: You thought there, was a surplus?— Yes, of about £700. lam very sorry now that Smith is put in front of everybody. His debt is for the balance of the purchase money I paid for the business. Witness went on to say that he was under tho impression ihat tho price for the business was £500, but it afterwards appeared it was £550.

Mr Stewart: Did it never cross your mind that it would have been better if you had come and conferred with your creditors?— No. I thought the business was in belter hands than my own. I asked Air Aslin to arrange for tho meeting of creditors for Friday, so that it would suit the train, but apparently it could not be done. I did not hide myself. I was not well enough to sco anybody.

Replying to Mr M'Farlane, bankrupt said ho was in his proper senses when he gave the mortgage to Smith, He was acting under advice. Ho thought at the time there was a surplus to pay tho creditors.

Mi M'Farlane: Who advised you?—My solicitor, Mr Aslin.

Mr M'Farlane: And yo;i -cally thought when you got that advice you wore doing right by the rest of your creditors?— Yes. Continuing, bankrupt said when he was at Waitati ho did not know his creditors were looking for him with summonses.

Mr M'Farlane: Was it not to keep clear of these summonses you went to Waitati?— Nothing of tho sort. I went away for a little quiet because I wins broken down. Tho only way I could get it was to go away from the secno of bustle and business. I don't know that I would have gone away at all if it had not been for the nssuranco of Mr Hutton that he would effect a sale of the premises within a, week, for £600.

Mr Stewart, referring to a letter with regard to tools being sent to bankrupt at Glenomaru for bush-felling, in the namo of Thomson, ssked if it was not none with tho object of keeping the creditors off bankrupt's track-Bankrupt replied that it was not. | Mr Stewart: In reference to the other mortgago you signed to secure Aslin and Bedford in carrying on the business. It was also for costs?—l was too far gone to understand the letter. I did not look at it. . , 1 . Mr Stewart: And there is another claim that comes in front of the others?—T expected the business to be wound up every day. How can you expect things to turn out as they did? I had no idea there was anything like tho amounts owing to creditors that there is. Mr Stewart: Are you in a. position to make any offer?-No. I am in no position to offer anything. I have not a shilling, unless Mr Aslin can do or suggest something. Mr Aslin said ho would not have dreamt of carrying on for one month had it. not been for tho offer of £600. It would have paid everybody. His firm had not taken security for any past debt, and had taken no undue advantage of anybody. Both tho assignee and Mr Moss (Sine! and Co.) made statements as to the condition of the estate and tho realisation of the properties, gjjtl it was resolved that the assignee. Messrs Moss and Speight act. in the best, method possible in realising the pronerlios; also that they have power to 'ell bv private t.reity. It. was'further resolved that the creditors, make no claim en anv value there mightbe in the Glenomaru lease.