COMPANY’S ASSETS.

Waikato Times, Volume 111, Issue 18664, 16 June 1932, Page 8

COMPANY’S ASSETS.

VALIDITY OF LIQUIDATION QUESTION OF WAGES CLAIM. SETTLED BY THE COURT. A dispute as to whether the liquidation of a company was valid and whether claimants for wages have priority over debenture-holders In the assets of the company was ventilated in the Supreme Court, Hamilton, be- ( fore Mr Justice Herdman, to-day. ! Plaintiff AA r as George Alfred Stanton, who claimed to be a receiver appointed by one of the debenture-holders, the Taumarunui Permanent Building Society, and defendant was Clarence Masters, of Taihape. There were 43 wages claimants interested. Counsel for Stanton, outlining the facts, stated that in July, 1930, Watkins Brothers, Ltd., sawmillers and box merchants, operating In Frankton . and Taihape, decide to go- into vol- 1 untary liquidation. Masters Avas appointed liquidator. Practically all the assets were subject to debentures. Doubts arose as to the validity of the winding-up and as to the question whether the wages men were entitled to priority over the debenture-holders. Stanton was appointed receiver and laid claim to the assets on behalf of the Taumarunui Building Society, a debenture-holder. He made formal demand for the assets in Master’!' . hands. Masters, however, had been notified of a possible claim for wages"N J payments and said he could not hand 1 over the assets. Proceedings taken in Wellington to get the queistion decided but there AA-as a dispute as to certain facts and no progress / was made. Assets Liquidated. His Honour asked if any of the assets had been liquidated. Counsel replied that the liquidator Reid between £I6OO and £I7OO In cask as pioceeds of the realisation. He pointed out that His Honour had three questions to decide (1) whether the liquidation was valid; (2) if so, did the wages men have priority; (3) if v the liquidation is invalid did the AA-ages men- still have priority by reason of Section 4 of the Companies Amendment Act, 1928. i After legal argument His Honour decided that the liquidation was invalid. - Claimants’ Submission. Counsel- for claimants submitted that the company AA r as not’ in liquida-. tion and further, If-that was so, then section 4 of the Companies Amendment Act, 1908, applied so as to give Avages claimants a right to payment in priority to moneys OAving under debentures. Evidence of the Avinding-up of the company was giA’en by Clarence Masters, public accountant, of Taihape. He first doubted the A-alidity of his appointment as liquidator about. tAvelve months later. It Avas thought at the time that the Avages men and deben-ture-holders Avould be -paid and a surplus left. He conferred several times > Avitli representatives of the Building , Society as second debenture-holders, f There were no differences concerning * witness' method of. realising on the assets of the company. To His Honour vvltness said he believed all the assets he disposed of were covered by debentures. Witness stated that he kept the debenture-holders fully cognisant of his actions. He received a demand for the assets frbm the receiver, but declined to hand them over as he Avas in doubt as to the validity of the liquidation and as to who Avas entitled to the assets. Cross-examined, witness said from July, 1930 to July, 1931, he understood himself to he purely a liquidator and never considered himself to be a receiver. I-Ie admitted employing Stanton to assist him iri the realisation. ' ‘ Counsel for the debenture-holders quoted authorities to show that whether the company was in liquidation or not in neither case did the Avages men have priority. His Honour decided that possession of assets had not been taken by or on behalf of debenture-holders by the supposed liquidator Avith the result that the wages claimants were not en-. ’titled to priority.