AFFAIRS OF A BANKRUPT

Taranaki Daily News, 30 November 1932, Page 10

AFFAIRS OF A BANKRUPT

! PAYMENTS TO CREDITORS argument over arrangement. ASSIGNEE EXAMINES PARTIES. “It is a most peculiar state of affairs; on the one hand we have the sworn statement of bankrupt, and on the other we have the sworn statement of three reputable citizens, _ commen Mr C. O. Pratt, Official Assignee at Hawera, yesterday after the examination of Kenehia Wilkinson, an Okaiawa bank-rupt,-and three of his creditors, Messrs E. Dixon, L. Hall and. J., Barclay. It is -difficult for me to comment but it seems that there is something Wrong with private assignments if they can be dealt-with in this manner, added Mr., npx*a,tt » Yesterday’s meeting of creditors in the estate of-Wilkinson was the result of statements made by Wilkinson at a meeting of creditors held 10 days ago and subsequently denied by the creditors concerned. • ... * _i • Bankrupt, in his sworn statement, alleged that Messrs Hall and Barclay had been appointed trustees for . his creditors in July, 1931, when it was arranged that he should pay them £2 a month for distribution among his creditors as a whole. He stated that a sum of £26 was paid from August 20, 1931, to October 6, 1932. Bankrupt alleged that this sum had been distributed among three creditors, Messrs Dixon, Hall and Barclay, and that had it been distributed in accordance with the arrangement that he asserted had been made he would not have been forced into his present position. The Official Assignee at that meeting stated that if such an • arrangement had been made he would take action io recover the whole of the monies paid to the three creditors mentioned. The three creditors concerned the following day made a Press statement that had they 'been present at the meeting they would have denied that there had been any assignment of the debtors’ estate or that Messrs Hall and Barclay had acted as trustees for the other creditors. Bankrupt filed his petition in November 10. In July, 1931, he had met hfe three principal creditors, in company with his own solicitor, and had agreed to pay them £2 per month. They stated that the debtor at that juncture had stated that he would make other arrangements for the payment of his smaller creditors. They denied that there was any assignment of estate. They had sufficient knowledge of the law to. know that it was improper for a debtor to make preferential payments, and it was not likely that debtor’s own solicitor would have allowed them to have made such a mistake. If there had been any suggestion/of acting on behalf of other creditors Messrs Barclay and Hall would not have accepted the arrangement for the payment of £2 per month.

Opening the meeting yesterday Mr. Pratt said he had thought it necessary to call the meeting in view of the statement made by three creditors denying statements made by bankrupt. The bankrupt strenuously maintained that his version was correct. His statement was a sworn statement, and he was prepared to be examined. , This meeting would not have been necessary if the three creditors had been present at the first meeting as was their duty. QUESTION OF PUBLICITY. It was significant that one creditor rang and , asked him to get his name left out of the Press. In fairness to creditors and the bankrupt it was necessary to sift the matter properly. Before examining the bankrupt he would like to refer to a matter which he hoped would never recur. One of the creditors rang him at his house and complained of statements made by the assignee. Defamation was mentioned and the creditor said he was considering taking the matter further. From that Mr. Pratt inferred that the creditor would complain to the Minister of Justice. While he held the . office of assignee Mr. Pratt would tolerate no interference with the due discharge of his duties, he said. His comments had been fair and made in the public interest, so he had nothing to fear. He had, Mr. Pratt, continued, a duty to perform, > and if he thought certain comments should be made it was his duty to make them. Certainly the creditors could comment on those remarks, but there was a proper time and place. He objected , to the practice of being telephoned at his home after office hours, for that could only end in both parties making’ remarks they' would afterwards regret. As far as the matter under review was concerned, every attempt seemed to have been made to suppress publicity. A threat had been made to intimidate him. In the public interest bankruptcy matters should be made public. He had enough unpleasant duties to perform without being hampered. The question of the publication of the proceedings of the first meeting, at which there was no quorum, had been raised. He did not agree that the proceedings in such cases should not be published. As a matter of public policy they should be published. The purpose of a quorum was only for passing resolutions, which in most cases were unnecessary as the Act gave wide powers to the assignee. The chief resolutions they could carry were for the' handing back of certain assets to bankrupt or making recommendations to the assignee. There was nothing to prevent the publication of bankrupt’s position and his sworn state-’ ment. Bankrupts should explain to the public how' they became bankrupt. Further, Mr. Pratt said, he was not responsible for what was published. The Press was entitled to attend, and it was no concern of his unless the reports were inaccurate. If he made comments the Press was entitled to publish them or not. Some creditors had apparently taken up the attitude that he was to blame for whatever was published. Mr. Pratt then proceeded tc examine bankrupt, who was sworn. Mr. Pratt: At a private meeting of creditors on July 10, 1931, who were present? Wilkinson said Mr. Dixon was in the chair and Messrs Barclay and Hall were also present. Mr. P. O’Dea represented bankrupt and Mr. T. A. Kiiunont, another solicitor, was present. Mr. F. Ching, - Mr. O’Dea’s clerk,’ took minutes. Mr. Pratt: Did Mr. O'Dea read a list of creditors?—Yes. NOTES OF PRIVATE MEETING. Mr, Pratt then read portion of the rough notes taken by Mr. Ching. Ac- ' cording to these bankrupt offered to : pay £2 10s per month off his debts, and ■ on the motion of Mr. Hall, seconded by

Mr. Dixon, Messrs Hall and Barclay were appointed trustees. Mr. Pratt: How did you view the motion? Bankrupt: I honestly thought the money would be divided amongst all. the creditors. Mr. Pratt: You understand the sanctity of the oath and that you are liable for per jtny if what you say is untrue? Do you still swear that? Bankrupt: Yes. Bankrupt said a statement in the notes that he had agreed to pay 8 per cent, on the moneys owing was Untrue. Mr. Pratt pointed out that if the bankrupt said this was untrue the trustees could say that the rest of the notes were incorrect.

Bankrupt said that last April or May he received a letter from Mr. G. J. Bayley, representing a .reditor, Woodward, seeking payment of an account. Bankrupt replied by letter that Mr. Bayley would have to see the trustees about it.

Mr. Pratt: Did you then see Barclay? —Yes.

’ What did he say?—He said not to worry - as people who had not turned up to the meeting vzere not justified in , putting in a claim. ■ - Continuing bankrupt said he had heard ' a little while before that only three creditors were getting the money, but ; Barclay, he alleged, had said that as the three were at the ’ meeting they Should be paid first. He had continued paying the money to the trustees bei cause he thought their appointment relieved him personally from responsibil- ' ity. Mr. Pratt: Did Mr. J. Foy ever worry you ?_Yes. I went to see him and told him what had been done and he said he thought the trustees were wrong. He j rang Mr. Barclay and said it seemed ’ ridiculous that three creditors should get . all the money. . I Bankrupt then related a conversation L he alleged he had with Barclay after the first bankruptcy/ meeting. Barclay r asked how he had got on and then ’ asked whether anything had been said ' about the trust money. , Bankrupt’s examination by the assignee was concluded by Mr. Pratt re- , verting to . the private meeting of credi- ; tors. Bankrupt said he had not then ' made any suggestion of an arrangement ’ he would make with the other creditors. ’ He had not the money to fulfil such an arrangement. Referring ,to the published statement of the three creditors Mr. Pratt said that obviously if that were true prefer- , ential payments had been made. Their statement might have been distorted, but there it was. As the solicitors had not protested at the meeting surely the arrangement sworn to by bankrupt seem- , ed likely. CREDITORS ASK QUESTIONS. Mi - . Barclay then questioned bankrupt. He objected to the statement about Mr. Bayley’s letter as it had never been shown to him. He objected to the statement that the had said: “What about the trust money?” That was not true. Did Wilkinson remember that when he first, made a payment he gave Barclay £2 instead of £2 10s, ' saying it would not leave him enough for the smaller creditors if he paid the full amount? Bankrupt denied it. You reckon the minutes are wrong?— Yes. i ... Don’t you remember saying—l said no such thing. You accuse me of asking about the trust moneys?—Yes. You knew very well I alluded to the £2 trust money I was holding?—l did not. Mr. Dixon then asked Wilkinson a few questions. When the insurance money was claimed did not you tell the assessor ■ that the wireless set was part of the furniture?—Quite so. , , Mr. Dixon: Well, why didn’t'you pay the balance, on the wireless set when you got the compensation? Mr. Dixon then asked whether he had not written to bankrupt’s wife asking why they had bought another set and not paid anything off Dixon and Co.’s account. Bankrupt admitted seeing Mr. Dixon on the morning of the first bankruptcy meeting. Mr. Dixon: When I told you that your statement was untrue didn’t' I say I was going to deny it? Didn’t I say it was false and that you said you were, going to pay the smaller creditors out of what was left?. Wilkinson: ' No. I never said that. Mr. Pratt: What is all this about?, . Bankrupt explained that this was relating to, a conversation with Mr. Dixon. Mr. Dixon; You admitted to me .you had made a mistake in your statement? Bankrupt: I did no such thing. Mr. Dixon: Did I not 'strike my account off in your presence?—Yes. Mr. Di xon explained that it had been his practice if a man went bankrupt to strike off his account. It was not his practice to attend meetings. Mr. Foy proceeded with the examination. Wilkinson said he agreed he should pay £2 per month for two months, to Mr. Foy for the other creditors and not pay to the .trustees. Mr. Foy: You made one payment and stated that you had arranged to pay me and Mr. Barclay alternately. Bankrupt: Yes, you arranged that. Mr. Foy: When the next payment was due you came in and said you were going to file. Bankrupt: Yes. Mr. Foy asked whether certain creditors had received notice of the private meeting. Bankrupt said he was not sure. I This concluded the examination of bankrupt. EXAMINATION OF CREDITORS. The assignee proceeded to examine Mr. ' Dixon on oath. Mr. Dixon agreed to the publication of his remarks. Mr. Dixon said that at first he was ( under the impression that his account . was owed by Mrs. Wilkinson. ‘ The assignee: Do you agree that the private meeting was properly consti- ( tuted?—Yes, . 1 With regard to this offer of £2, was it , understood by the bankrupt and all pre- , sent that the two trustees were appoint- j ed to distribute the money among the three creditors? —I have not the slight- j est doubt about it. i

Notwithstanding the fact that Mr. O’Dea was representing another creditor? Mr. Dixon said that Mr. O’Dea thought it a good arrangement for Wilkinson to pay the smaller creditors out of what he had left over.

Mr. Pratt: Mr. O’Dea’s diary entry and bill, of costs infer that the trustees were appointed for all the creditors, or else why the reference to the preparation of an assignment? Mr. Dixon: Not so.

The assignee said he had written to Mr. Ching. Mr. Ching replied that he had no recollection of the trustees being appointed for three creditors only. That would be unusual, and he thought he would remember any such arrangement. Mr. Pratt could not see why two trustees should be appointed to distribute money to three creditors.

■Mr. Dixon said that Wilkinson knew for months that the three creditors were getting all the money and it was not until he was pressed that he made the suggestion that all the creditors should get it. He was quite satisfied that the creditors’ version was correct.

Mr. Barclay, on oath, corroborated Mr. Dixon’s remarks in toto and agreed to the publication of his examination. It had never struck him that the other creditors should be brought in as he had Wilkinson’s assurance that the other creditors would be paid. When bankrupt found out how the money was distributed he made no protest. The reference to the trust funds made after the first bankruptcy meeting was not made in an undertone.

Mr. Hall agreed to the publication of his examination. He moved the resolution at the private meeting, he said. He thought £2 10s was the amount, £2 to go to the three .big creditors and 10s. .to the smaller creditors.

The assignee: Is it not feasible then that the trusteeship was for all the creditors? Mr, Hall: I did not think so. Referring to the conflict of testimony Mr. Pratt said it was not for him to say which was the correct version. If the three creditors believed that Wilkinson was making other arrangements for the other creditors he would understand their actions. The affair illustrated his objection to private assignments; some creditors got left out. He considered it was the place of trustees to write to all creditors and ask for details. If creditors did not reply they could be left out. .1

Mr. W. Glenny (Patea) said he had some knowledge of assignments and had never heard of one in which some creditors were included and some left out. He was not suggesting that the three creditors had done anything wrong, but he could not understand how solicitors would have allowed such an arrangement as was said had been made. He considered it would be a preferential payment after an act of bankruptcy. Mr. R. J. O’Dea agreed with this view. '

Mr. Pratt said the three creditors were certainly justified in doing what they did if they had the assurance of bankrupt that he would pay the other creditors.

Mr. O’Dea then moved that the assignee secure legal advice and if so advised take what further steps he deemed expedient and necessary regarding the alleged assignment. In seconding the motion Mr. Glenny said the point was vital, to the community at large. The position should be ascertained.

Mr. Pratt said he took the motion to mean attacking the payments made to the trustees. The motion was carried.

Those present were: Messrs Pratt (presiding), Barclay, Dixon, Hall, Glenny, O’Dea (representing Goldstone and Patterson), and Foy. (several Patea creditors).