COMPANY'S LOSSES

Otago Daily Times, Issue 22368, 15 September 1934, Page 7

COMPANY'S LOSSES

OSWALD SMITH AND CO., LTD. PETITION FOR WINDING UP LIQUIDATION BY COURT DESIRED An order that the firm of Oswald M. Smith and Co., Ltd,, should be wound up was made by Mr Justice Kennedy in the Supreme Court yesterday morning. The petitioners -were Aulsebrook and Co., Ltd., Cadbury Fry Hudson, Ltd., M’Lcod Bros., Ltd., the Dunedin Brewery and Malt Extract Company, Ltd., and the Taieri and Peninsula Milk Supply Company, Ltd. It was stated in the course of the proceedings - that the directors of the company had been satisfied that it should go into voluntary liquidation, but Mr A. G. Stephens, who appeared for the petitioners, made it clear that this course was not acceptable to the unsecured creditors, to whom £15,500 was owing. They had created a fund to carry out the proceedings “ in the interests of commercial morality.”

When the case was called. Mr F. B. Adams said that the papers served on the company had come into his hands. He was, therefore, appearing on behalf of the company. Having no authority, ho wished to say that, he did not oppose the order asked for, and the. only point on which he wished to make any suggestion was that of costs. If an order for costs was sought he thought it might be better to reserve the question in order to ascertain whether the proceedings were necessary or served any useful purpose. His reason for referring to this aspect of the case was that the affidavits showed that the directors of the company were themselves prepared to put the company into liquidation. Had this course been followed it would have been possible to have the company in liquidation at an earlier date. So far as lie was aware a voluntary winding up would serve every purpose under the new Companies. Act, and he was not aware that there was any distinction between one class of winding up and another. The only difference he could think of was that in the case of winding up by order of the court the liquidator happened to be the official assignee. He would work for the benefit of the creditors at the expense of the country if it happened, as appeared probable, that there were no assets to divide. Mr Adams added that it was clear that it was intended that certain directors should be examined. Obviously an attack would be made on the, directors. If an attack were made it was possible that the costs of the present proceedings might come out of the pockets of his clients. .

Mr Stephens said that, as there was no opposition to the application, he took it that the petitioners merely had to satisfy the court that the preliminary conditions had been carried out, and that a good case for the winding up had been made out. The proceedings had been brought under the Companies Act, which provided that a company might be wound up by the court if it was unable to pay its debts. The first point on whicli the petitioners relied was that the company had failed to pay debts to the petitioners amounting to £6485. The second was that it had given a debenture to the Bank of New Zealand, which had appointed a receiver and had taken possession of the company’s assets. It was stated that the bank would not be paid in full. The directors had expressed a willingness to go into voluntary liquidation, but that course was not acceptable to the creditors. Mr Stephens added that the debts , owing to unsecured creditors were £16,500, and there were no assets to meet them. All the unsecured creditors approved of the proceedings.

Mr Adams: That is too wide. I am one myself, and I don’t approve at all. Mr Stephens suggested that the amount owing to Mr Adams was so small in comparison with the total of £15,500 that it'had been overlooked. He added that the creditors had formed a fund to meet the expenses of the proceedings. They knew that there were no assets to meet the cost, but they felt it necessary in the interests of commercial morality that steps should be taken. That was one reason why this particular form of winding up had been asked for. He did not pr'opose to ask for an order for coats. He did not see any hope of getting them, so an order would not be of much use.

His Honor stated that the petitioners were entitled to the order sought. He directed that the company should be wound up by the court.