BANKRUPT PUBLICANS.

Otago Daily Times, Issue 20707, 3 May 1929, Page 2

BANKRUPT PUBLICANS.

MEETING OF CREDITORS. PROCEEDINGS ADJOURNED FOR TWO WEEKS. A meeting of creditors in the bankrupt estate of Messrs Branson Bros., lessees of the Crown Hotel in Rattray street, was held in the office of the official assignee (Mr J. M. Adam) yesterday afternoon. Mr J, W. Thomson appeared for the bankrupts, and Mr S. •Solomon watched the proceedings on behalf of the landlord of the hotel, Mr J. Cherry, who is at present abroad. A proposal was submitted by Mr Thomson on behalf of his clients, embodying, inter alia, a payment of 12s 6d in the £, and suggestions under which the' bankrupts might carry on the business. The meeting adjourned for a fortnight to allow of Mr Cherry being communicated with, and the proposal was held-over in the meantime. The creditors agreed that Branson Bros, should carry on the hotel in the meantime without remuneration. The sum owing to unsecured creditrs, according to bankrupts’ statement, was £261)7 12s sd, and to secured creditors £2973. The estimated value of securities was given as £3400, leaving a surplus of £427. The total debts in the estate amounted to £2697, and the assets to £3413 4s sd, comprising stock-in-trade £2474, book defats estimated to produce £2OO, cash in hand £4O, cash in the bank £272 4s sd, and a surplus from the securities in the hands of secured creditors of £427, leaving a deficiency of £715 12s. The principal unsecured creditors were as follow:—Neill and Co., £7O 2s lids Ainge and Co,, £ll3 13s 7d; Bray Bros., Ltd., £25 16s 9d;; Lanes, Ltd., £402 17s 9d; Milne, Bremner, £lll 17s; Otago Daily Times and Witness Company, £23 8s; New Zealand Express Company, £76 17s 10s; M’Gavin and Co., £99 10s; Powley and Co., £348 9s 6d; Thomsons, Ltd.,.£157 0s Id; R, Wilson and Co., £177 2s 9d; Waitaki Dairy Company, £45 18s lid; Wholesalers, Ltd., £2Ol 13s 6d, A. de Beer, Ltd., £36 4s; A. and J. Watt, £44 15s; C. 6. Macindoe (Auckland), £176 Is sd; W. Scoular and Co„ £l3O 7a 3d; J. Nisbet, £56 2s fld; John Watson and Co., £177 7s 6d.

Mr Adam said that it was apparent that the books in connection with the business had been properly kept, and at first blush it looked as if the bankrupts had a good proposition, hut it w ( aa obvious that the rent was impossible. They could not expect to make any headway with such a handicap. They might do some good if the hotel were on the main street, but situated where it was the hope of making a “do” of things was very small.

The official assignee then read the following statement by the bankrupts “We purchased the goodwill of the lease of the Crown Hotel on August 1, 1927, for the sum of £750, together with the sum of £I3OO for furniture and fittings, and £7BO 7s for the stock and plant, making a total purchase price of £2830 7s. The- lease had only a short time to go, and a new lease was arranged extending the term to April 28, 1033, at a rental of £2650 per annum, plus rates, the rent being paid by monthly instalments of £l3O each, and by a payment of £IOOO on April 28 in each year in advance.

Ws paid in cash £730, and were financed by the Southern Investment Company, Ltd., advancing the sum of £2OOO and an advance from the Bank of New Zealand bn overdraft guaranteed by the Southern Investment Company, Ltd._, £ISOO. At the same time I, Ernest Cyril Branson, had in addition to other small the sum of £SOOO invested in a manufacturing company in Dunedin, and also 2550 shares in another company. > Unfortunately a short ume after we had taken over, the hotel the company in which the £SOOO was in- \ ested went into liquidation and the whole of this money was lost. “ Our finance was arranged by the late Mr Speight on an unregistered instrument by way of security, he being intimately associated with us. After his death, however, the Southern Investment Company, Ltd,, required a registered instrument and further security. I, E. C’, Branson, to satisfy their claim, deposted with them my scrip for 2550 shares ,in Wholesalers, Ltd. We feel sure that Mr Speight under our original arrangement would not have required this, and these shares would have been uffikft 610 U 3 out of our P resent

! 10 . ime we took possession of the hotel it generally was not in the uest condition. We considered that with our previous experience we would soon be able to convert it into a firstclass hotel, and strenuously endeavoured to carry this into effect. We find, however that this is impossible with the present overhead charges. Our balance sheet chows that we have made an average loss of approximately £lO a week in the running of the hotel. Through circumstances oyer which we had no control, and without any warning to us, our guaranteed account with the bank was closed ou the 10th day of April, 1929, by the Southern Investment Company, Ltd., they and the N.Z. Breweries, Ltd., having received a copy of our last sixmonthly balance sheet before it had been submitted to us. The company then on the 12Fh day of April, 1929, served notice calling up their security, and stated as one of their reasons that they considered we could not possibly continue to carry on under the present rental. £ll3O of which became due on the 28th April. “ Prior to the landlord leaving for England last February we personally saw him and .advised him then that the rent was far too high, and he promised to go into the question and then see us again. He did not do this, and wo were surprised when we heard he had left New Zealand. We have had several interviews with the landlord’s solicitor to. endeavour to arrange for a reduction of rent, but unfortunately his solicitor, states he has not power to alter the terms of the lease. We then decided to call a meeting of the unsecured creditors, and this meeting was held on the 24th day of April, 1029, when the whole position was explained to them. They appointed a committee to act on their behalf and to consider any proposal that could be made to enable .Us to carry on. The best the landlord’s solicitor was able to arrange at that time was to refrain from taking any action on account of the £IOOO becoming due on the 28tb April, 1020, for one month, provided one-twelfth was paid as an instalment. This was to allow time to receive a reply by cable from the landlord. “On placing the position before the representatives of the Southern Investment Company, Ltd., and the unsecured creditors on the 26th April, 1929, they were not prepared to accept the terms submitted by the landlord’s solicitor, and the Southern Investment Company, Ltd., had notified their intention of taking possession under their security that afternoon. We therefore decided in fairness to nil parties that no option was loft to us hut to file our petition in bankruptcy, which we did.” In answer to questions as to what offer the bankrupts could make, and how they proposed to carry on, Mr Thomson read a written proposal, which included an offer of 12s 6d in the f. Mr Solomon said that in his opinion there had been no necessity whatever for Branson Bros, filing in bankruptcy just at present at all events. His firm had been astounded at the difficulties into which the bankrupts had landed themselves, hut as soon as the position was grasped an endeavour had been made to do something that would be in th'e best interests of all concerned. He had conferred with Messrs Thomson and Tonkinson on the various aspects of the

case, and had done his very best to get into touch with the landlord,. who was at present on hie way to London. Finally, he had gone to the Southern Investment Company, which was threatening seizure, and had suggested that it should pay one month’s rent and one month’s portion of the annual premium in the meantime. This was agreed to, and the bankrupts also agreed to abide by this proposal. Two days later, however, .he was astonished to hear that Branson Bros, had filed in bankruptcy despite all that had been done to save them. He was now doing what he could to get into communication with the landlord, but if he could not do so he would he driven into exercising his power of attorney. Ho would consider the offer that had been made, and if he thought it was fair and right he would urge his client to accept it. There was nothing more to be done just now,, and he would ask that the, meeting be adjourned until lie could get into touch with Mr Cherry. The meeting agreed to an adjournment of two weeks, the official assignee to have the power to call another meeting during that period if Mr Solomon established communication ’with his client within two weeks. Mr J. A. Ainge said an adjournment was the only alternative just now. The sympathy of the meeting was with the bankrupts, who, he believed, were paying the second highest hotel rent in Dunedin.