COMMERCIAL PROPERTY AND FINANCE COMPANY.

Otago Witness, Issue 2856, 9 December 1908, Page 37

COMMERCIAL PROPERTY AND FINANCE COMPANY.

VOLUNTARY LIQUIDATION DECIDED UPON.

An extraordinary general meeting of the Comeroial Property and Finance Company (Ltd.) was held 011 the 2nd in the company's office, Vogel street, for the purpose of considering a resolution for the- winding up of the business. Mr J. Arkle (chairman of | directors) presided, and 22 other shareholders, including Messrs W. Burnett and A. Hill-Jack (directors) were present. The company's solicitor (Mr J. F. "Woodhouse) was also in attendance. WJN'DIXG-UP EESOLTJTIOX The Chairman moved: — "That it has been proved to the satisfaction of the company that the company cannot, by reason \ of its liabilities, continue its business, and that it is advisable- to wind up the same, [ and accordingly that the company be wound iup voluntarily. " The Chairman said it was , not necessary for him to say much at that | stage, for a good deal had been said on the j subject already. The directors had worked hard and put the affairs of. the company jn a better position than they had ever been in before, but their present position had practically been forced upon them. The weakness of the company was its constitution, which allowed depc-sitors to withdraw 1 their money at a moment's notice. Their I money w as" all but out, and ;ould not be [ got in at call, and consequently they had ■to fall back on their bankers. The bankers had been accustomed to meet them, but would not go any further. The financial I year had commenced with deposits amounting to £35,140, and they now had £29,666 of depositors' money. That was, that in ! the interim there Had been withdrawals I aggregating £5474. Their account at the bank was overdrawn, but not to the extent of £5000. TJio directors wore, however, ad- ! vised that the power* of the depositors were such that if they demanded a return of ' their money, and c6uld not get it, they ' had tli© right to go to the Supreme CottTt and bring about compulsory liquidation. I The directors, therefore, after various meetings, and on the. advice of their solicitors, came to the conclusion that it would b» to the interests of shareholders to go into voluntary liqtiidation, and he moved accordingly. Mr T. A. Hunter asked if the bank would not allow a bigger overdraft if the director* promised to make a call. He was not_ * business man, but it &aemed to him peculiar that they should take money on deposit and not have some assured fund f:«n which to meet withdrawals. If they could make money by working on a bank overdraft it -appeared to him, a 6 a layman, that the t company and the directors would be- in a stronger position if they had their own i money to d<?al with. He thought that inI stead of going into liquidation the wiser j course would be to call up some of their uncalled capital. The Chairman said the ansSver to that was that there was no time in which to make a call. It was perfectly open to such k course. A call of lGs a share would bring in somewhere about £10.000. Mr G. Esther seconded the motion for voluntary liquidation. Mr Ta~pper said he thought it was a pity j that a eplcndid hule company like this, provided it was properly managed, should go to the wall. He thought an arrangement could have been made whereby they could j ha^e carried on. He did not consider that the company had been carried on on right lines. He would like to know if any other bank had been a.sked to take their business when their credit was stopped at the-ir own bank. One of the best little companies in Dunedin had been destroyed— destroyed through bad management from first to last. The directors told them at the last meeting that the company was in a better financial i position this year than for many yeans. The Chairman: So it is.

Mr Tapper snid that the- same directors last year, and al-=o tlw year before, declared a dividend. Wat, that wise? If the directors had acted wisely thoy .would have created a re-erve fund, an<l thus placed the compaii) in ths position it should occupy. The share*, ir.^ead of b?ing worthless, should bo worth £2.

The Chairman eaid they always found the men who knew least about a thing talking most fluently in regard to it. He had not been long on the board, but they had tome nasty legacies left to them, and had practically cleared them all up. Under the new management no bad debts had been made. He could not answer for what had been done by previous managements. If the meeting agreed to make a call, well und good. But a call of 10a would be no good — £1 a chare would be required. He had watched the institution very closely, and knew every account in it, and he could tell them that it was a moot difficult thing to carry on such a business successfully. Customers di<l not come to them from choice, they came from necessity. If they could get the money from the banks for 6 per cent, they woufd not come to the Commercial Property Co. and pay 8 ncr cent, and 9 per cent. It might take even Mr Tapper all his time to pull the thing through. The company had ne\or gone in for the bloodsucking busings. They had never charged more than 10 per c^nt.— generally it was le=s— and if they wanted bloodsucking to be the order of busine-f, then they had better (jet new directors. Mr J. Hunter pointed out that it was by reason of workintr on a email capital that they were enabled largely to make their profits. Mr Tapper talked very feelingly about the absence of dividend?, but he did not know whether that gentleman was conversant with all the up« and downe of the company. The present .action of the bank was something of a surprise, because in the bank .scare of 1895 the company had an advance of over £6000. Mr Esther *aid he wa*; perfectly satisfied the call would not be responded to. People had not got the inonev, and if they had, the probability was that they would not put it into the company at the present time. Mr J. Brown : They would have to if the call was made. A Voice: "How •wouH -you make them pay it?" Mr Woodhouse : Would the creditors wait until the call came in? That is the trouble. Mr James Brown said that, having acted as auditor .for tho company for many years, he could easily understand the fetling that . prompted some shareholdera to favour carrying on. He himself had tlie

strongest feeling against any readjustment of the company's affairs. The proper thin jr. to do mrf to liquidate and make an end oi it. Hie experience of the company ever since he had anything to do with it was that it had been most unfortunate. Losse* had arisen in most unexpected quarters — losses due, however, to the nature of the business. He had pointed out to the direo* tors — although there had been no need tc do it, as they already knew — that the com? pany's position was one of imminent risk owing to the nature of the business. A> company with a small paid-up capital oi" £3000 making advances and discounting bills up to £50,000 could not in any sense be considered to -,be trading on safn lines. To* do its business it was necessary for the company to get money from the bank to tide over and fix the over-lapping of deposits. In times past that had been managed. The call on the bank had not been very great. The company had deservedly held the good opinion of those who deposited with it. Both the depositors and the bank thought it wa6 sound from the point of view of safety. Now the position had altered, and danger having arisen, the shareholders ought not to wonder at this occurring to a company engaged in » business which had never been satisfactory or profitable, and vhich, in his opinion, would never result successfully. The best and wisest thing to do was to liquidate and. make in end- of tha affair as speedily as possible. Mr Tapper: We have heard Mr Brown** opinion. t ask you how it was that the directors paid dividends when the company was in such- a rotten position. Mr Brown: I did not say the company was in a rotten position. There never va« a dividend declared that the position did not warrant, so far as profit and los 3 account is concerned. No one could possibly foretell the future. So far as the position could be safeguarded it was done. Since 19C0 a. | 6um of £14,000 had been written off the | balance sheet in bad and doubtful debt?. Of that amount £3000 was taken from capital, and the balance from profit and loss account. The business was able to make fairly large profits, but it was attended with i very material risks, inasmuch as so much money was lost. The record is not a blame- ; worthy one. It 4? a case of downright mis- I fortune. The business this company aimsat doing is not uossible on the terms. The Chairman said that the directors had considered themselves perfectly justified m paying a dividend. Perhaps Mr Tapper did not know that the responsibility of paying a dividend rested largely with the auditor, and on the last occasion, after Riving full consideration, we thought we were justified in passing it. . The motion was then put, and received 19 votes, and' the chairman declared th© motion carried by the reversed majority. APPOINTMENT OF LIQUIDATORS. Dr Hoekcn moved: — 1. That Messrs Arlcle, Burnett, and Hill' Jack be appointed liquidators of the company. 2 Tha.t as soon' as the liquidators think fit, but not later than the end o] six months, another meeting be called to receive a statement setting forth tn» progress made with the liquidation during that period. . 3 That the remuneration of tha liquidators be the amount at present paid them as directors of the company, -together with such other eums as th« shareholders may see fit to grant in tha light of the result of the liquidation . 4 That the liquidators devote then ! time as liquidators exclusively to th« ■work of liquidation, during the next su months. „ , , .■. _ A further motion provided for tha present premises being retained if founU desirable, and also that the services of any or all of the company s staff be retained as was found necessaa-y. In proposing the series of motions, Dr Hoeken Lid that all shareholders were 'aware of the circumstances which had lea " the «UiP»ny'a unfortunate position The corapanyhad only one class of creditori Debitors and the bank and sharewsm '"jitjohn Mill *<»"?f d^ t "£,''• o «a If they did not get it from those who ha* borrowed ir." thef must pay it themselves, and pay it shortly. He- would -make no promises as to whether they could pay it out of tho assets. Personally h*> thought they could. He could assure them that sitce h« came to New Zealand he had r.evei? done so much work for £o little money as he had done in connection with that comP *M V r Esther a*ked if proxies would be 06 the slightest use. in regard to the resolution* being movod. The Chairman said he understood than Mr Esther held some proxies, and, 08 course, they could be used, but they would! b« of no avail, a3 they would be overwhelmed . '

Mr Esther, Teferrinor to th" remuneration! proposed to b*» paid to the liquidators, characterised, the amount— about 15» petf week — a« ludicrous. As one of the larcesfc shareholder in" d-iys jtone by. and certainly the coniiTany' 1 ? largest enstomor and at former director, he said that the amounj; proposed was Absurd. *

Mr Ark!? said that h« was not, going to work hard for six months for £20. but h& was ouite prepared, and «o wero the- other 1 liquidators, to carry out th* work fai'hfurhfor nothing. They want/rl no promise of possible future remuneration either. Th«»v - were likely to get. enough " promises ** ■ th« ™«xfc six or nine ninths. — fUauchter,) Bnfc promise* would ' not dolor iheir creditors, and the JiauidaVnr* rni«M have to take stem mraaurea. He further .assured them that whil* it mi«rhfc b* necessary to make some s*»al! comnromiftes. which rould Xi left to the discretion of the Houidators, +hey •would mnk« tio biff or** without consulting the principal eharenoVWs.

Th-9 resolution were then put and carried unanimous! v.

A P>RTIXG SHOT.

Mr Taniyr moved a vofo of thank* to the director 1 ? lor "ha->inß biou<?ht our Jnt!«

barque to a havsra of rest—on a si-ca! of rooks." v The Chairman: I oould hit just sa hard as Mr Tapper if I so desired. This concluded the proceedings.