MEETING OF CREDITORS

Southland Times, Issue 21660, 23 March 1932, Page 8

MEETING OF CREDITORS

MOTOR MECHANIC’S FAILURE. DISCHARGE TO BE OPPOSED. A meeting of creditors in the bankruptestate of Herbert Schroeder, of Invercargill, motor mechanic, was held yesterday before the official assignee (Mr 11. Morgan). Bankrupt, was represented by counsel and some 15 creditors were in attendance. Bankrupt, in his written statement, said that in 1927 he rented a garage and service station from G. H. Reid, who had built it to his order, and he commenced business towards the end of that year. During the time he was in business he made a small profit, but could not collect, the money owing to him. In 1931 he found it impossible to carry on without getting more’ working capital and as that was not available, he sold out. The balance-sheet prepared shortly before the sale showed that his assets, which were taken at- cost price, exceeded his liabilities by a considerable sum. The terms of the sale provided for the price of stock and plant being determined bv valuation and the amount realized was below book values. Commission on the sale and other expenses iverted the surplus into a deficit and made it impossible for him to pay his creditors in full. As soon as he realized his position, he called his creditors together and offered to assign his estate to trustees for their benefit. Some of the principal creditors objected to the proposed arrangement and requested him to file his petition. He had no assets other"than those shown on his statement and, in order to pay as much as possible to his creditors, he surrendered two insurance policies on his life for £232 19/-.

Bankrupt's statement of assets and liabilities showed £1453 9/5 owing to unsecured creditors and £243 1/8 to secured creditors (against which latter sum was set £5OO, the estimated value of securities, leaving a surplus to contra of £256 18/4). Assets amounted to £1123 8/2 as follows One motor car, estimated at £5O; book debts, £734 17/-, estimated to produce £638; cash held in trust by a solicitor, £l7B 9/10 and surplus from securities in hands of secured creditors, £256 18/4. The deficiency, therefore, amounted to £330 1/3. The principal unsecured creditors were' The Vacuum Oil Co. Ltd (Dunedin) £417 18/6; Messrs A. S. Paterson and Co. Ltd. (Dunedin) £l9O 10/1; Texas Co. (Aus.) Ltd. (Dunedin) £l6l 12/3; Eadie Bros. (N.Z.) Ltd £ll6 5/9; Michelin and Co. Ltd (Wellington’) £67 2/6 and E. W. Pigeon and Co. Ltd. (Dunedin), £57 6/5. Under examination by the official assignee, bankrupt said he was a married man with two children, aged 13 and 6 years respectively. When the garage was erected by Mr Reid (bankrupt’s father-in-law) he (bankrupt) was to nay him interest on his outlay and also payments due to the Building Society which advanced a certain sum on mortgage. Bankrupt guaranteed such mortgage, the payments under which amounted to some £l2 every four weeks. The garage really belonged to Reid whose tenant bankrupt was. His wage bill a week amounted to .£3O; that amount included his own drawings which, in the early stages, amounted to £6 10/-, but later he cut hir amount down to the bare sum necessary to run his home. He employed an accountant to keep his books and all receipts were paid into the bank. Work was very -dentiful both as regards the service station and repairs. He attributed his position to his difficulty in collecting his book debts, to recover which all reasonable steps were taken. The business was sold for approximately £lOB3, part of which was covered by a £5OO debenture and the balance (less commission) paid in cash. The cash portion was paid to the National Bank. In October a meeting of creditors was held.

In reply to a question by counsel representing the largest creditors, bankrupt said that when he commenced the business, he possessed only the tools, valued at £2O or so. Mr Reid advanced the money to buy the plant and machinery. Counsel: Did you give security over the plant ? Bankrupt: Not that I can remember. The Official Assignee: Would you deny ever having given such security? Bankrupt: No, I would not deny it.

Counsel at this stage read a statement signed by the bankrupt ip which he gave particulars of private assets (house, furniture etc) owned by him amounting to £1756, less mortgage £BOO, leaving a balance of £956.

Counsel: Did you at that date own the house and furniture?

Bankrupt: No, I did not. Bankrupt was further examined at length by counsel regarding the position of the business during its years of 'operation. Counsel: You say you took £6 10/- a week in wages at the start?—Yes. Counsel: 'Did you not tell the Vacuum Oil Company you were drawing £8 at one stage?—No; if I did it was wrong. When did you find yourself in difficulties?—Almost from the start. I was handicapperl through lack of capital. In reply to his own counsel, bankrupt said that a Mr Henshelwood, in his employ, prepared the statement forwarded to the Vacuum Oil Company in 1928. Each annual balance-sheet had since then been sent to the company. The bank insisted upon having a debenture. J. S. Haywood, who had acted as accountant for the bankrupt while in the service station, offered to give evidence in order to make certain matters clear to the creditors. On one occasion, he said, he endeavoured, with the bankrupt’s knowledge, to raise additional finance for the business. The private books were submitteel to a solicitor who made inquiries from the Building Society regarding the title to the property etc.

At the conclusion of this explanation, the representative of the Vacuum Oil Company moved a resolution that the bankrupt’s discharge should be opposed until 20/- in the £ be paid. The resolution was carried.