O’BRIEN BANKRUPTCY

Sun (Auckland), Volume IV, Issue 1077, 15 September 1930, Page 1

O’BRIEN BANKRUPTCY

Deficiency Stated at £57,982 creditors express sympathy “Could Have Paid Later in Full” ‘•BANKRUPT has been strictly honourable in his dealings D and it is very unfortunate that the attitude taken up by a Southern creditor has forced him into this position.'’ Speaking as one of the creditors, Mr. Eliot It. Davis this morning' at a meeting of creditors in the bankrupt estate of Thomas Alexander O Brien, picture-theatre proprietor, expressed the opinion that every effort should be made to facilitate bankrupt's discharge. Reference was made by several large creditors to the bankrupt’s enterprise, and unfortunate circumstances which forced him to file his petition. The statement of assets and liabilities revealed a deficit of £57,982 19s 6d, which, however, was stated by bankrupt’s solicitor to be due largely to a remote contingent liability. The opinion was expressed that had bankrupt been allowed to continue for another two years he would have been able to pay his creditors in full.

The official assignee, Mr. A. W. Witter*, presided over a large ittendance of creditors. Bankrupt was •presented by Mr. K. . Inder. The statement of assets and liabiliM showed unsecured creditors, 53!407 19s 8d; secured creditors, 399,500, less estimated value of "ecurities. £127,600; other liabilities, 3207,850; total debts. £240,257 19s Sd. On the credit side appeared furniture, £2,000; property, £152.175; surplus (torn securities in hand. £28,100; total usets, £182,275. Deficit, £57,982 m Bd.

He had. since succeeded in having the leases of the three unwired houses cancelled, and all further liability on his part terminated. Another factor was the action taken by the Land and Income Tax Commissioner in levying land-tax on a high scale on the combined value of the large number of theatre leases he held. This resulted in a claim for arrears of land-tax of over £4,000. With other theatrical people in Auckland, he/had not known until recently that land-tax could he assessed by the Government on leasehold interests. “I would point out,” said Mr. O’Brien, in his statement, ‘‘that virtually every big financial concern in New Zealand and Australia today is experiencing very difficult times. “Notwithstanding the difficulties to which I have referred I was, and am still, quite confident that given time I could have met all my obligations and paid all my

Mr. Inder explained that at a meeting of his creditors it. was shown that Mr. O’Brien was in a position to pay ,9s in the pound and still show a profit (about £20,000, but in the statement repared for the bankruptcy proceedadJ it was necessary to show a coningent liabUity of £205,000, which tag a personal guarantee o£ Mr. IBrien’s, in connection with the Civic Tuttre. "This,” said Mr. Inder, 1« a very remote contingency.” BANKRUPT’S STATEMENT In his statement, bankrupt said he ime to New Zealand twelve years ■go under engagement to the Fulleriayward Company in Wellington, ocjprlng nearly every high executive joiition while with that company. Mine years ago he secured a lease of aeEmpire Theatre, Dunedin, and was so successful that from time to time he utemied his businesses to include •ases of some nine other theatres in lackland and also the South Island, :amely the Palace and His Majesty's, at Blenheim, and Everybody's, The Pisa, The Royal, The Tivoli, Rialto Epsom), Britannia and Regent at lackland.

creditors in full.” He called a meeting of his creditors and placed the position before them. There was a large representation of | creditors on August 13. when 21 ! creditors, representing approximately ; 55 per cent, of the value of the unsei cured debts, agreed that he should be ! given two years in which to consolidate bis position. A period of 14 days was allowed for the other creditors in which to consult their principals. Only two of the unsecured creditors, both i for small amounts, had intimated that i they would not agree to the suggested | allowance of two years. PUT BAILIFFS IN i On or about August 14 judgment was ! obtained against him by a creditor at S Dunedin for the sum of approximately i £IOO. The decision of the creditors’ I meeting was explained to him, but the • creditor did not acknowledge the letter. This creditor then put the bailiff into the Empire Theatre. Iu fairness to his other creditors bankrupt then had no option but to file liis petition in bankruptcy, at the same time advising the assignee of the action of the Dunedin creditor, so that necessary steps could be taken to protect this asset for the benefit of his creditors |as a whole. , , , , .. “I am of the opinion that had the Dunedin creditor agreed to fall in with ! the wishes of the majority of my creditors it would not have been necessary for me to file, and all my creditors would have been paid m full,” said bankrupt. CIVIC THEATRE COMPANY In a further statement regarding bis various theatres, Mr. O’Brien stated that the Civic Theatre Company owned a lease of the land from the City Council and the building ana chattels therein. This was mortgaged to tile Bank of New Zealand under a floating debenture, the bank having as security a syndicate of guarantors. His position was merely that or a shareholder in the Civic Theatre Company He also indemnified the guarantors against loss, giving them a second mortgage over all his assets. His shares in the Civic Theatre Com pany, both preference and ordinaly, were mortgaged to Messrs. O. Nichol- J son and K. Davis to secure an advance by the Bank of New Zealand which, at the present time, stood, with accumulated interest, at about £lo,ibJ. He was not sure whether this account ranked as a secured or unsecured debt. His Civic Theatre shares amounted to approximately 14,700 preference and about 1 300 ordinary, all fully paid-up. He also had a liability to the company for some 3,600 ordinary shares. The official assignee remarked that as far as he could see the only free assets were the chattels in the Empire Theatre at Dunedin. A valuation of these was being made and their realisation could be considered later. Investigation has also b een made into the position of the Blenheim theatres and both theatres had been found to be showing a loss This showed that it was important to disclaim both leases immediately. Referring to the attitude taken up by the Dunedin creditor, whose action had forced the bankruptcy, Mr inder said that the same creditor had later telegraphed regretting the step and offering to do anything possible to P re l '' e " t I proceedings in bankruptcy. j fortunately,” said Mr. We,, “this realisation came too late. BlatinK that Mr. O’Brien had to take the profits of the Empire Theatre at Dunedin, which was pay- ™ 11 per cent., to meet losses incurred in Auckland, Mr. O. Nicholson said that if that theatre realised anything like its cost price, which was by no means improbable, there would he something left for the unsecured creditors. Personally, it was the only thing he looked to for payment of his debt The unsecured creditors were indirectly concerned in that asset and if it was allowed to continue it j

About September, 1928, it, was deided to extend and rebuild the Empire ’leatre at Dunedin to meet the chat’age at that town of the new picture ouse being built by J. C. Williamson, ltd. For this purpose he gave a first mortgage of £BO.OOO to the Bank of Zealand, secured over the whole bis business and personal assets, ■ad guaranteed by Messrs. C. Rhodes ad V. J. Lamer in consideration of ! » Paying them a percentage of four * tent - on the amount of the overnlt from time to time. About the time of the completion tbia theatre, and before it could be Saanced. the Civic Square problem ' f ime an urgent one in Auckland, 'a most of the Aurkland theatres 'jj* °f a second-class nature he deled, if necessary, to have one highae* leading theatre as a nucleus of ? other enterprises in Auckland. ;« approached the City Council and eewed the greater portion of the uc Square block. He then secured M a ‘d of financiers in the city and 1 company was promoted to build the , Theatre. For the purpose of aucing this company a mortgage >* liven by the company to the Bank ■iew Zealand over the company 'Perty guaranteed by various share- . “ erß and others, the guarantors >h i a secon d mortgage over the me of his assets. He intended to .-sauce both the Empire and Civic ,? tres in conjunction with one of 'all 1 5631 theatrical interests in Ausanf* negotiations were under 11 this direction when the Aus»n financial crash killed all prosw <» of this. *? s t of construction, furnishing -completing he Empire Theatre *to some thousands of pounds , « than provided for. thus placing ■ 2*2? strain on hie finances. The ire atre a h ° cos t a good deal 1. tnan anticipated, and even i’Hnn • now stood at a total cost of '»« ■ was the cheapest theatre : anti elas s that has been built •Australasia >41!? 5' it * c Theatre Company, in tarsi ** e e hi a large number of Probably the soundest of flj y-trical company in New Zeaurie” 18 int 6rests in the theatre, of jL ’ Were m °rtgaged with his to ths Civic Theatre guards' " u t there was every prospect Ud- suuities becoming valuable by testiv co operative agreement * rrlved at by the Auckland j, ’ "Oder which sound economy Itlt k .. rections was resulting in better profits. a °vent of talkies °* maSn factors con‘Hs .. ® *° niy bankruptcy was dej v Ven * °* the talkies,” contin•>«tßiul- upt ’ 8 statement. “The very *‘® n of a talkie plant is a y latter, from three to Wren ! ÜBand Pounds being reCC ° PC * ,n ® to thc s ‘ ze the iu installing talkie (i lett ln * our of my houses, but lf *s or , B k°wing heavy losses on , nr T' theatres which are not ‘ijoo, ta J*ies. This proved a tre°wtacle.”

would greatly reduce the liabilities. A forced sale, however, would probably result in the loss of that asset. The official assignee explained that the mortgagees could carry on the Dunedin theatre as trustees for the official assignee. It was resolved that a committee of three be appointed to act as supervisors with the official assignee in the winding-up of the estate, Messrs. Stirling Rogers, E. C. Huie and 1,. J. Stevens being appointed to act in this capacity. The official assignee remarked that the ramifications of the business were very involved and would ; require a good deal of straightening' out. SHOWN GREAT ENTERPRISE Mr. L. J. Stevens, who represented an Oamaru ‘creditor, stated that his client had written zo him explaining that although he was a big creditor in the estate he felt that he must express his appreciation of the spirit of progress and the enterprise shown, by Mr. O’Brien in attempting to keep up with the times. He also felt that Mr. O’Brien was the victim of rather unfortunate circumstances and that every effort should be made to allow him to facilitate his discharge. Mr. C. F. Eskell, on behalf of the film exchanges, expressed sympathy with bankrupt. He said that the industry all over the world had experienced very hard times, but with the improved pictures now being made the position was now showing considerable improvement. Mr. O’Brien had shown great enterprise in the conduct of his business and he felt sure that the. film exchanges would be pleased to see him again in a position to continue his efforts. Mr. Eliot Davis said it was unfortunate that, the Dunedin creditor had not realised the position sooner. “Mr. O’Brien is not. the only one who has his troubles at the present time,” said Mr. Davis, “and 1 think we should do what we can to facilitate his dia charge. The Civic Theatre could not have been started at a worse time and probably if it were not for the situation in Australia he would not have been in this position today.” The meeting was then adjourned.