£225.000 LOSS

Poverty Bay Herald, Volume LXI, Issue 18581, 15 December 1934, Page 5

£225.000 LOSS

LAXLY-CONTROLLED, FIRM PRINCIPAL DISAPPEARS DISCLOSURES TO CREDITORS MISLEADING DOCUMENTS (Per Press Association.) DUNEDIN, this clay. Disclosures with ' respect to ‘the affairs of Oswald M. 'Smith and Company, Limited, now in liquidation by order of the Supreme Court, were made at a meeting of the company’a creditors yesterday afternoon. The creditors, to whom the company’s liabilities are £28,645, expressed no hope of being able to obtain any relief from their loss, and it was also stated that., apart from any question of shareholders’ losses, the Bank -of New Zealand, 'which put a receiver into the business, was likely to be. between £30,000 and £4ojooo short'of the amount due to it.

So many creditors attended tho meeting that it was held in the Magistrate ’s Court room,; in which increased seating accommodation was; provided. The official assignee, Mr J. M. Adam, presided. The assignee said that the meeting had been called for tho purpose of deciding whether ho was to carry on as official liquidator, or whether the creditors wished to appoint someone else. . A second question was whether a’ committee of inspection to act on behalf of the creditors should be ap? pointed. In each case, application would have to be made to the Supreme Court.

BANK’S HEAVY LOSS Going on to deal with the position of tho company, he stated that its subscribed capital was £160,233. Since May last, a receiver for the Bank oi New Zealand had been in possession. The total amount owing, to the bank at that time was £75,479, and it held two ’debentures' for £40,000 each. He expected that there would be interest on top of that. In addition, there were debts to trading creditors amounting to £21,951, and national economy bondholders were creditors

to the extent of £836, while there were depositors amounting to £5858. The total amount owing to creditors was, therefore, £28,645, plus the deficiency owing to the bank. ‘ The bank is still in the position of trying to get what it can out of it,” he added. • “It is safe to say that the bank will be short by between £30,000' and £40,000. If there is any consolation in misfortune, the bank is even worse off than you people are; “You will be interested to know,” Mr-Adam continued, “that in the balance-sheet for last year, the stock was given at £119,779, the overdraft

at the time being £92,000. The turnover was £476,000. In a booklet which was issued in 1930, the balance of assets over liabilities was given as £170,000.”

NO SIGN OF STOCK SHEETS The assignee went on to enuuierate various eubsidiary companies. He . referred particularly to a company called Progressive Investments, in which all except one of the shares were held by Mr Smith. Its apparent object was to deal in the shares of Oswald M. Smith and Company. Apparently when shares came on the market, Smith did not want to see them go at, say, ss, because it was not a good advertisement, and he bought .•hem in through Progressive Investments. So far he had not found out where its office was.

He added that according to the documents of Oswald M. Smith and Company, £13,000 of its money had been invested in Progressive Investments. It was, therefore, to be assumed that it had spent this amount in buying up its own shares. There was no sign of the stock sheets of Oswald M. Smith and Company at all. No officer or director ever saw them, although the auditors must have had them.

Mr W. D. Taylor said that his firm was acting for the directors. The reason that Mr If. B. Williams, chairman of directors, was not present, was that he was a large sheep station holder, and this meeting had been called at a time when he was in the middle of shearing. He was, however, willing to come to Dunedin, though there was not much that hc„could tell the creditors.

FAMILY'S £50,000 INTEREST “I can tell you,” Mr Taylor added, '“that the directors have instructed us that at the annual meeting held in March last the directors asked Smith what the shareholders might expect in event of the business being sold throughout New Zealand. Smith’s reply was an assurance that they could expect to receive at. least 20s in the pound. The directors all along accepted 'Smith’s reports regarding the balance-sheet, and that appears to be where a good deal of the money has gone astray.” Mr Duncan: Our difficulty is that 'Smith has gone out of the country. Wh'at we want to know is where the money has gone to. A voice: Where has he gone to? (Laughter). Mr Duncan: I heard that he was in (London.

'“Do you want Smith brought back?” was a question which Mr Duncan directed to the meeting, but he was not answered.

Mr Hogg suggested that the committee set up by the directors should be allowed to carry on. The meeting concluded after the assignee had told the meeting that it was not likely that Mr Williams would have knowingly allowed matters to go on as they had because the Williams family was interested to the tune of £jQ,OOO.