£5000 DEFICIENCY.

Star (Christchurch), Volume XLIV, Issue 380, 23 March 1932, Page 1

£SOOO DEFICIENCY.

Lyttelton Hotelkeeper Bankrupt.

DISCHARGE RECOMMENDED. “ The prospects for the unsecured creditors are very black indeed,” stated the Official Assignee (Mr J. H. Robertson), when a deficiency of about £SOOO, and assets valued at under £IOO, were shown in the bankrupt estate of George Sidney James, hotelkeeper, of Lyttelton, at a meeting of the latter’s creditors this morning. ' The meeting, being in fairly general agreement that the economic depression was the main cause of bankrupt’s failure, passed a motion recommending yie Official Assignee to facilitate bankrupt’s discharge. Bankrupt attributed his failure to paying excessive rent, and to declining business, which decreased from £lls a week in 1930 to £95 in 1931 and to £4B in 1932. Owing to a war among hotelkeepers in Lyttelton, beer had lately been sold at a price which was unprofitable. Three Mortgages on Hotel. The amount owing to unsecured creditors was £5067 19s 3d, the main items of which were £1950 owed to bankrupt’s wife, £I4OO owed to his father, and £1254 to the Lyttelton Borough Council for rent and rates. The secured creditors were owed £5041 7s 4d, and the value of the securities was £4350, leaving a shortage of £691 7s 4d. The secured claims included £713 8s Id to Ballin Bros., who were secured by a bill of sale over the hotel furniture, which was valued at £SOO. The Saxon Hotel property, valued at £3500, was subject to a first mortgage of £2500, a second of £IOOO to the National Bank of New Zealand, and a third mortgage of £650 to the Lyttelton Borough Council. The assets were valued at £9B 17s, leaving a deficiency of about £SOOO. Could not pay Rent. Bankrupt in his statement said that he took over the British Hotel in February, 1928, at which time he had an equity in the Saxon Hotel, Lyttelton, of £6378, less about £2OOO borrowed from his wife and £ISOO from his father, leaving an equity of £3878. To take over the British Hotel he obtained an overdraft from the National Bank of £ISOO, secured by a second mortgage on the Saxon Hotel, and guaranteed by Ballin Bros. The overdraft had been reduced to £IOOO. The rent of the British Hotel was £25 a week, which was excessive, and the hotel had not paid expenses at any time. Had bankrupt not had rent coming in from the Saxon Hotel he could not have carried on. About May, 1931, he could not pay the rent to the Lyttelton Borough Council, which was givena third mortgage on the Saxon Hotel for the back rent and legal costs. The rent was reduced to £ls a week, but as business was still going back he was not able to pay the rent at the reduced rate, in spite of reducing the stall by three and doing the bar work himself. The furniture, valued at £1272 when he took over the hotel, was now worth £SOO. Bankrupt had bred a horse called Excursion four years ago, and still owned it. For some months now the animal had been leased to Messrs H. G. Scott and H. J. Cox for a term of three years, with a contingency of one-fourth of the stakes won. Carrying on the Hotel. The Official Assignee said that the actual position of the finances was slightly different from that shown in the statement. The stock in trade and the cash in hand were primarily due to the Lyttelton Borough Council for rent. The only amount for possible distribution was the £6 6s book debts, which meant that there would be no dividend unless in the unlikely event of a surplus on the secured claims. The prospects for the unsecured creditors were very bleak indeed. The question was whether Ballin Bros, and the Lyttelton Borough Council could carry on the hotel, the rent of which was £25 a week. Pending negotiations between Ballm Bros, and the Borough Council, the Assignee had carried on the hotel under the supervision of the Town Clerk of Lyttelton. Cross-examined, bankrupt said that he was fifty-seven years of age, with a family of four. He had had thirtyone years' experience in the conduct of hotels. The bar takings were at then* peak in February, 1930, since when they had shown a steady annual drop from £6021 to £4900, and then to S° i or , the >' ear en ded February, la£ “- Bankrupt had believed himself „,?„£, nancia! ' counting on the equity of £6378 m the Saxon Hotel, and was not troubled by his creditors until pressure was exerted by the Borough Council. There had been no leakage m the finances, and no dishonesty. His expenditure of money on horse racing was very small. The estate was left in the hands of the Official Assignee. “We should put nothing i n the way of bankrupt getting his discharge,” recommended Mr C. E. Cross, representing a creditor firm. “ The slump has knocked him over, and I don’t think we can be harsh with him.” Mr Cross’s motion that bankrupt’s discharge be facilitated was carried