LIQUIDATION OF COMPANY

Southland Times, Issue 23989, 2 December 1939, Page 15

LIQUIDATION OF COMPANY

FIRST MEETING OF CREDITORS LIABILITIES AMOUNT TO £2OOO The first meeting of creditors of Gaskin and Taylor, men’s outfitters, of Invercargill, a company in liquidation, was held yesterday morning before the Official Assignee (Mr A. E. Dobbie). Mr T. V. Mahoney appeared for a number of creditors and Mr G. C. Broughton appeared for Joseph Richard Gaskin. The Official Assignee said the company was registered at Invercargill on May 20, 1938, and went into voluntary liquidation on April 4,1939. On November 7, 1939, it was ordered to be wound up by the Court. The company had a capital of £5OO divided into 500 stares of £1 each of which Joseph Richard Gaskin, of Invercargill, company manager held 499 shares and Clifford George Taylor, of Invercargill, draper’s assistant, held one share, all of which were fully paid up.. , , On April 4,1939, the deficiency of the company for the period of its trading was estimated to be £797/1/7 and to this had to be added the loss of its paid up capital, £5OO, and the costs of liquidation. , , . , “Immediately on receipt of the wind-ing-up order, I proceeded to carry out my statutory duty as Official Assignee, and for that purpose notified Mr Gaskin that I required him to submit to me within 14 days of the date of the order, the statement of affairs of the company,” said Mr Dobbie. “Mr Gaskin did not reply to my notice. I then despatched a telegram to him. He replied to this that he was writing to me but I have not received any communication from him, nor have I received the statement of affairs of the company. I hope I am not a person to be balked in the execution of my official duty, and I desire to make this observation for the benefit of persons similarly placed to Mr Gaskin. “The Companies Act has its disadvantages as well as its advantages. In the modem business world two or more persons can form themselves into a private company with the liability of its members limited to the extent of their share capital. This method of trading has a semblance of permanency and stability which facilitates the procurement of trading credit, but the Companies Act has its safeguards in that it requires annual balance-sheets to be prepared and lodged for inspection, and when a dissolution comes it requires the officers of the company to give an account of their directorship throughout the whole period of trading. They have to prepare or cause to be prepared a complete account of their stewardship of the business of the company. This is only fair because those creditors who have lost their money in the venture should be put in a position to form a judgment for future guidance as to how far this method of trading can be relied on or otherwise.

“The legislature recognized the importance of this accounting by the company’s officers for it plates a fine of £lO a day for every day during which there is default without lawful excuse in submitting a statement of affairs. The result of Mr Gaskin not complying with the statute is that we are without that information which is necessary to launch the winding-up. I admit the forms may be complicated for a layman, but I specially asked Mr Gaskin if he would like the assistance of an accountant to prepare them. He has not so far availed himself of this offer.”

Mr Dobbie said that the primary purpose of the meeting was' to determine whether an application was to be made to the Court to appoint a liquidator or committee of inspection. It was decided that no application be made to appoint a liquidator in place of the Official Assignee, or for a committee of inspection. MANAGER EXAMINED Examined by the Official Assignee, Joseph Richard Gaskin said the capital of £5OO was all paid in cash. He began with about £4OO worth of stock. The monthly turnover at the start was £lOO or so and at Christmas that year the figure would be about £450. No more stock than was considered necessary was purchased. It was not until they took stock that they discovered their position. To remove part of its indebtedness the company borrowed about £l5OO <which was obtained through a mortgage of his own share in an estate in which he was interested as beneficiary. It was collaterally secured over his home property in Invercargill. The sum of about £lOOO went to his trading creditors, he said, and with the balance of the money he had to take the second mortgage off his home property. The company shifted its premises from Newburgh’s Building to a place where the rent was not so high, said Gaskin. He received wages amounting to £5/3/6 and his two assistants received £4/15/- at first and later £5/2/6. His own wages now were £5/2/6 and he had to pay £2 for rent. At the request of Mr Dobbie, Gaskin promised to provide at the earliest possible moment a statement of affairs of the company. ONLY ASSET To Mr Mahoney, Gaskin said his only asset was a half share in the estate of Joseph Gaskin being administered in Christchurch, apart from certain household furniture. The value of that share would be about £2OOO. He had sold the motor-car he previously owned, and it had realized £145. He had no money in the business in Christchurch where he was now employed. In the past 12 months he had not transferred any aS Asked by the Official Assignee for the reason of the failure of the company, Gaskin replied that its failure was due to the overhead expenses being too high in proportion to the tum°Vffi'reply to a question by Mr Broughton, Gaskin said that the turnover was increasing during the time he was in business. ' The liabilities amounted to about £2OOO, the principal creditors being: K. A. Gaskin, £697/5/9; Manawatu Knitting Company (Palmerston North), £66/9/-; F. W. Cooper, Ltd., (Christchurch), £32/11/4; Screen Advertising Ltd. (Dunedin), £2O/9/5; Cambridge Clothing Company (Auckland), £43/13/4; Kaiapoi Woollen Company (Invercargill), £5B/6/-; Parisian Necktie Company (Auckland), £43/7/5; Star Hat Company (Auckland), £23/9/11; Ross and Glendining Ltd. (Invercartjilll £6l/13/7; Wanganui Woollen Company Ltd., £49/19/6; McPhail and Fishfr (Christchurch), £22/18/4; Ambler and Company (Auckland), £95/7/8; Lichfield Shirts Ltd. (Christchurch), £B4/0/8; Sargood, Son and Ewen Ltd. (Invercargill) £lOB/7/2; Lane Walker, Rudkin Ltd. (Christchurch), £66/0/5; Gollin and Company (Wellington), £193/15/10; Claude Neon Signs (Auckland), £145. Ihe meeting was adjourned sine die.