PUBLICAN’S FAILURE.

Star (Christchurch), Volume XLIV, Issue 366, 7 March 1932, Page 8

PUBLICAN’S FAILURE.

High Rate of Interest Given

as Cause. DEFICIENCY OF £3946. The high rate of interest on borrowed capital, the 10 per cent wage reduction and a price-cutting war on beer and spirits were the reasons given for failure in business by George Arthur Clifford Whitford, proprietor of the Canterbury Hotel, Lyttelton, when he n.et his creditors at a meeting this morning. The Official Assignee, Mr J. H. Robertson, presided. The statement of bankrupt showed debts totalling £4424 3s 4d and assets totalling £477 18s 10d, leaving a deficiency of £3946 4s 6d. The amount owing to secured creditors was £IOB4 8s lOd and the estimated value of securities £1450, leaving a surplus of £365 11s 2d.

The Official Assignee said that there was a nominal surplus on the security over the secured debts of £365 11s 2d, but in point of actual fact he was of opinion that this surplus would disappear. Bankrupt’s stock-in-trade was seized by the bailiff in distress for rent. It was valued at £177, but at a sale brought only £9O. The furniture was held under a bill of sale by a creditor for £350. It had cost banklupt £7OO. There was little possibility cl anything being realised from this source. Bankrupt’s Statement. In his statement bankrupt said that in November, 1920. he commenced business as a shipwright at Lyttelton. His capital was £4OO. this amount being borrow on his house. He carried on successfully until the Otira tunnel was opened in 1923, when his business began to decline. Early in 1925 he borrowed £SOO to enable him to finance and overhaul a job on a ship. The lender pressed for payment, and to repay him he obtained a guarantee from the bank under which he was advanced £3OO. He borrowed £2OO in addition from a moneylender. Further amounts were borrowed up till May, 1927. In that year his premises were destroyed by fire and bankrupt lost heavily. All his books and plant were destroyed. He was paid between £7OO and £BOO by the insurance company. Out of this amount he repaid the amount owing under the guarantee. After paying business accounts he had £4OO left, which he paid into his bank account. At this time he owed money tc a moneylender, but he could not remember the amount. A New Start. Bankrupt rebuilt his premises, but, as the business did not improve, he borrowed sums of money from time to time to enable him to carry on. In May, 1931, he sold the business to his son, and out of the proceeds purchased the Canterbury Hotel, Lyttelton. Business was good up till wages were reduced by 10 per cent. His takings then declined. Following this, hotelkeepers in Lyttelton started cutting prices of beer and spirits, and his takings fell off further. During the time bankrupt was in the hotel he endeavoured to repay the moneys advanced to him by his moneylender, and by making these payments he was unable to keep up his rent. Through the rent falling in arrears the landlord commenced distraint and through this he was compelled to file in bankruptcy. He attributed his failure to borrowing money at a high rate of interest and loss of trade through the reduction of wages and further loss of trade through cutting prices. The Official Assignee, after questioning bankrupt, said that Whitford was evidently paying such a heavy rate to moneylenders that he had to let his ordinary debts run on. Whitford said that he must have been hopelessly insolvent when he sold his business to his son.

A creditor protested that bankrupt should not have gone into the hotel when he was owing so much money. His position at the time was not known to the creditors.

To the Official Assignee, bankrupt said that he had not told the firms he was dealing with that he owed £2700 when he went into the hotel business.

The Official Assignee said that the bankruptcy was a bad one. Bankrupt had not kept proper books, and it was a question whether further action should not be taken.

It was decided that the matter be left in the hands of the Official Assignee to take whatever action he thought necessary.