BOOT DEALER'S FAILURE

Waikato Times, Volume 100, Issue 16811, 1 June 1926, Page 10

BOOT DEALER'S FAILURE

PAID TOO MUCH FOR STOCK. HEAVY LOSSES SUSTAINED. The heavy losses sustained by Benjamin Cleggctt, a Cambridge hootdealer, as ii result of paying an excessive price for his slock, and a subsequent slaokcning-off in business, were responsible for the failure of a promising business, and he was forced to file a petition in bankruptcy. He was examined at Hamilton yesterday afternoon, when a discrepancy of over £llOO was disclosed. There were three creditors present, and bankrupt was represented by Mr Dallimore, of Cambridge. Bankrupt's schedule showed debts to unsecured creditors to amount to £1407 0s 7d, there being no secured creditors, while in addition he was liable for several large promissory notes. Stock in trade was valued at £ir>2o, and book debts were estimated lo produce £sl 15s 2d. Shop fittings were valued at £143 10s and furniture at £lO, while cash in hand and at the bank amounted to £SS 9s. Bankrupt's Statement.

In a written statement bankrupt set I out that he was a boot-dealer carry- j ing on business at Cambridge, and had ! no dependants. Prior to April, 1925, ' he carried on business as a bootrepairer in Duke Street, Cambridge, j but Mr A. B. Hodgson, the proprietor ' of a boot-selling business in Cam- '■ bridge, whose trade repairs he had been doing, offered to sell bankrupt the business, and he ultimately agreed : to buy it, the stock to be taken at j valuation on the basis of wholesale prices, with an allowance off for old '. slock, together with the value of the I shop fittings. He was now of the ; opinion that the prices placed by Mr j Hodgson on the stock were excessive, ] and that adequate allowance had not . been made for old stock. He did not I make an independent valuation, nor j was he advised by anyone witli regard ! to the purchase. Ho accepted Mr j Hodgson's valuation and agreed to pay j £2804 7s 9d for the business, as fol- i lows: —£900 in cash and shares in the I Auckland Farmers' Union Trading . Company to the value of £175. Tito balance of the purchase price was to ; be paid by monthly instalments, for i which he gave Mr Hodgson promissory j notes of various amounts falling due ] at monthly periods. His intenliou was i to meet these payments out of the shop ! takings, as he had no other means of j doing so. He took possession of the j business on April 14, 1925, and had; about £IOO in hand for working ex- : penses. The gross takings during the i lime he was in business were £1502 I 0s Id. The expenses had been £I2OO j IGs 5d for the purchase of stock, j £l4l 5s for wages, £IGO 2s 2d for ! rent, £32 13s 4d for insurance, £34 j 5s 4d for advertising and printing, and £36 10s 3d for petty expenses, lie had \ drawn for personal expenses the sum of £l7O 10s. He bought a cash regis- ! ter for £lO5, and afterwards, sold it for £7O cash, which he paid into the bank. ; He paid the first five promissory notes I as they fell due. He owed a balance j of £29 18s 8d oil two others, while the remaining four were still unpaid, and j a writ was served on him on May 12 j by the holder. i

In Aprjl last, in order to discover his true position, he took stock, and found its true value to be £1520, including a considerable amount of old and unsaleable stock. In view of that valuation, and his being unable to pay the amounts sued for, together with his liability for the subsequent monthly promissory notes, he decided to file'his petition. The valuation of £1520 was, he believed, the present value of the stock. He had' not disposed of any stock purchased from Mr Hodgson other than by ordinary shop sales. He attributed his failure to his agreement to pay what he now considered was too much for the business, and to the falling off of trade owing to severe competition. BuslnesG to be Sold. Examined under oath, bankrupt stated that the last valuation was taken in April, 1920, a year after he took possession. He judged from the slackness of trade and the smallness of returns that the business was not paying, and he could not find the cash to meet his promissory notes as they fell due. He estimated that gross takings of approximately £IOO a month would have enabled him to pull through. The creditors considered that bankrupt had paid an excessive price for the stock, and commented on the fact that he did not have an independent valuation made when purchasing. A resolution was then passed authorising the Deputy Official Assignee to offer the business (comprising stock, fittings and lease) for sale by tender as a going concern, Mr Cleggctt meanwhile to carry on the management of the business.