ENGINEER’S FAILURE.

Timaru Herald, Volume CXXV, Issue 18617, 12 July 1930, Page 21

ENGINEER’S FAILURE.

MEETING OF CREDITORS. IMMEDIATE DISCHARGE RECOMMENDED. A meeting of creditors in the bankrupt estate of D. G. Stephens, of Timaru, engineer, was held at Timaru Courthouse yesterday morning, before the acting Official Assignee (Mr T. Kane). In addition to bankrupt and his solicitor (Mr L. M. Inglis), there were present:—Messrs H. J. Mann, A. Aitchison, T. Phillips, C.Brehaut (Brehaut Brothers), G. Wilson (Vulcan Foundry Co.), W. H. Tubb, W. C. Davies (McGruer, Davies and Co.), B. L. Blodorn (Herbert’s Ltd.), E. Earwaker (Hallenstein Bros.), A. M. Parker (“Timaru Herald” Co.), and W. H. Walton (representing Messrs J. R. Bell and J. Smillie).

Bankrupt's statement showed unsecured creditors to the extent of £957/14/2; secured creditors £426/18/4; less estimated value of securities £840; surplus to contra £413/1/8. making total debts £957/14/2. Stock-in-trade was estimated at £4O; book debts £200; cash In hand £l3/2/3; property £46; surplus from securities in hands of secured creditors £413/1/8; total £712/11/11, a deficiency of £245/2/3. The secured creditors were;—J. R. Bell. (Morven) £BOO, State Advances Department £4O. The principal unsecured creditors were:—Prest and Holdgate £62/19/10, “Timaru Herald” Company £63/16/6. Timaru Borough Council £2O/11/1, Cordials Ltd. £2O/9/10, Vulcan Foundry Co. £B7/13/7, Jno. Kettle (Dunedin), £365, J. J. Niven and Co. (Christchurch) , £29/11/4, W. H. Tubb £4B, Sim and Sheed £l4, Aitchison £lB, G. J. Rush £lB, Trustees late T. Pringle £72, H. E. Mann £39/14/3.

Bankrupt, in a sworn stateinent, said that prior to 1912 he was a marine engineer. In that year he became a partner in the firm of Parr and Co., engineers, at Timaru. He was absent from Timaru on war service during 1918 and 1919, and decided after he returned to sell his interest in Parr and Co. Mr W. Mowat and Mr J. Kettle arranged to commence business in partnership with bankrupt, as the South Canterbury Engineering Company. Each of them put in £4OO as his respective share of the capital. There were also two tradesmen (Messrs Sandford and Lothian), who had no capital but who were to work in the shop for two or three years till they had acquired an interest in the business, which by that time it was intended by the five, should be incorporated as a private company. Bankrupt leased from Mr Thomas Pringle the engineering shop he had occupied ever since, and the business was opened in January 1921. No partnership deed or agreement was ever prepared or signed between Mowat, Kettle and bankrupt, but they conferred and agreed to all the plant that was to be purchased, and during the first year after the business opened, the agreed amounts were contributed by each of them. Plant to the value of £B2O was purchased and installed that year. All the work was done by bankrupt with Sandford and Lothian, all of them drawing very little by way of wages. Neither Mowat, who had a billet in Wellington, nor Kettle, who was at sea as a marine engineer, took any part in the working of the business, although it had been intended that Mowat should do so from the outset. After eighteen months Sandford went out, and after a conference with Mowat and Kettle it was agreed to pay him £75. In the end bankrupt had to find £4O of that sum out of his own separate moneys. After this, in spite of repeated appeals, he could get neither Mowat nor Kettle to interest themselves actively in the business, so that he had to carry the whole of it on his own shoulders, with Lothian, and a boy in the shop. They managed to just pa*v their •way, Lothian and himself cutting down their personal drawings to a very small figure. They carried on in this way until approached by Mr A. McKenzie, who had views of entering the business. It was agreed that McKenzie should participate, provided he brought more business and money to purchase increased plant to deal with heavy work. McKenzie put in £525, with which they purchased a heavy lathe and other plant. The volume of business did not show any increase, and on February 16, McKenzie became ill and had to leave. As all McKenzie’s savings had been put in, and bankrupt was unable to pay him in cash, he gave him security over a section and an interest he had in the North Otago Foundry. Both these were eventually realised to pay him. This left bankrupt without any capital that was not absorbed in the business. About the same time, Mr J. R. Bell, who had found Mowat the £4OO put in by the latter, said he was not satisfied with the position, as Mowat did not appear to have- any intention of interesting himself actively in the business. Bankrupt had no funds at the . me to pay out Mowat’s share, but Bell offered to let him have the £4OO on loan provided security was given on the plant. Bankrupt gave security, and under pressure from Kettle, who relinquished any interest in the business, he gave Kettle an acknowledgment that he owed him £4OO. This explained the secured debt to J. R. Beil and the unsecured debt to J. formed so large a part of his present liabilities. Between August 1928 and March 1929, he was sixteen weeks intermittently in North Canterbury fitting machinery for the Waikari Flour Milling Company, a job which eventually brought in a return of £246. During /his time, his illness last year, and while he was on other outside job, a man and a boy in the shop did not do enough work to justify bankrupt keeping them on. He did not receive any progress payments on the Waikari job for a long period, and at one stage owed £l6O in wages. These were paid up, and "the man and boy left at the end of last year. In April 1929, he had just commenced a profitable job for Gudsell Bros., Albury, when illness intervened, he having been forced to abandon the job to Niven and Co. His illness was followed by a nervous breakdown, and for nineteen consecutive weeks, he was unable to work at all. His wife then became seriously ill. In March last bankrupt commenced a contract with Mr J. Smillie, Albury Lime Works, and was to get £l6O if the job proved successful. The apparatus was unsuccessful, and he received only £2O. Following further illness, and threats from his landlord, bankrupt decided to file in order to give his creditors an equal chance to avoid falling into further debt. The plant mortgaged to Bell he valued at £BOO. His personal drawings from the business had been very small. During the past three years they had amounted to £440 through the bank and £SO in cash, or about £3/3/- a week. The main causes for his present position were the acceptance of responsibility for liabilities that he did not originally intend to assume alone; although he claimed to be a first-class practical engineer, his previous experience in the financial management of a business was insufficient; paying wages for labour that did not earn them; errors in costing jobs; bad debts incurred; omission to obtain independ-

ent legal advice and assistance, both when commencing business and when the various readjustments were made later; ill-health for the past three years. After bankrupt had been examined by the acting Official Assignee, Mr Blodorn moved and Mr Parker seconded: “That the assets be left in the hands of the Assignee, he to endeavour to dispose of the business as a going concern, by private tender, within tv.o months, or alternatively by private treaty.” This was carried. It was decided also, on the motion of Messrs Parker and Brehaut: “That it be a recommendation from the creditors that bankrupt be granted his immediate discharge, as soon as application is made.”