MR. J. Watts - Bankruptcy

SHOE TRADE FAILURE AT RUSHDEN

THE AFFAIRS OF MR. J. WATTS - THE MEETING OF CREDITORS

  A meeting of the creditors of Mr. J. Watts, boot manufacturer, Lawton-road, Rushden, was held in the Queen Victoria Hotel, Rushden, on Wednesday afternoon.  Messrs. Simpson and Mason, of Rushden, were the solicitors, and Messrs. A. C. Palmer & Co., of Northampton, were the accountants.  Mr. W. C. Cattell, of Kettering, was appointed to the chair.

  The balance-sheet showed liabilities;  Creditors unsecured, £1,571  14s.  5d., extra rental on eyeleting machine, £72;  total, £1,643  14s.  5d.  On this side were shown the following not included in the total:  Creditor fully secured (bank overdraft), £615  0s.  11d., hold mortgage on house, Wellingborough-road, Rushden, estimated value £750, surplus to contra £134  19s.  1d.;  creditors for rent, rates, and wages deducted contra £35  12s.  5d.; contingent liability on lease of factory, £201  10s.

  The assets were shown as:  Cash in hand £1  13s.  8d.;  debtors (225  16s. less reserves £125 16s.), £100;  stock-in-trade (£369  18s.  1d. less provision for realisation £184  19s.  1d.) £184  19s. machinery and plant, lasts, knives, patterns, fittings, fixtures, and electric light installation (£456  7s.  6d. less provision for realisation £273  16s.  6d.), £182  11s.; life policy, £75;  surplus from securities, £134  19s.  1d.; total, £679  2s.  9d.  Deducting preferential creditors £35  12s.  5d. (rent, rates, wages, etc.), the net assets were £643  10s.  4d, and the net deficiency was therefore £1,000  4s.  1d.

  The list of creditors over £10 was as follows :  British United Shoe Machinery Co., Ltd., Leicester, £19  16s.  11d.;  A. E. Fox and Co., Burton Latimer, £27  19s.  1d.;  F. Corby, Rushden, £25  16s.  10d.;  Richardsons (Coventry), Ltd., Coventry, £66  13s.  4d.;  W. J. Timms & Co., Northampton, £15  19s.  2d.;  James Collier & Co., Ltd., Northampton, £27  19s.  6d.;  S. Whittow & Co., Finsbury-street, London, £41  14s.  2d.; T. Sanders, Ltd., Higham Ferrers, £152  18s.  3d.; Gilpin Bros., Birmingham, £185  4s.  5d.;  F. H. and H. S. Pochin, Leicester, £31  7s.  8d.;  J. C. Brown, Ltd., Kettering, £96  8s.  1d.; Sanderson Reid & Co., Ltd., Leicester, £198  10s.  7d.;  Standard Engineering Co., Ltd., Leicester, £12  3s.  3d.;  Townsend, Hunt & Co., Leicester, £31  10s.  6d.;  William Paul, Ltd., Leeds, £15  16s.  7d.;  J. Chambers, Raunds, £127  16s.  9d.;  Stevens and Son, Leicester, £27  3s.  2d.;  Whatmoor & Co., Ltd., Manchester, £56  10s.  11d.;  Tyers and Bates, Ltd., Kettering, £204  2s.  8d.;  H. W. Chapman, Ltd., Wellingborough, £19  7s.  3d.;  Rushden Gas Co., Ltd., £12  12s.  1d.;  Hopps and Bankart, Leicester, £98  14s.

  Presenting the statement of accounts, Mr. H. C. Palmer said the creditors fully secured were the National Provincial Bank, Ltd., which held a mortgage on the house in Wellingborough-road, valued at £750, and he did not think that was over-valued.  The wages liabilities included three weeks’ salary which the manager had not drawn.  The lease of the factory had two years to run at £78 per annum, and there might be some difficulty in re-letting it in that part of the town.  The deduction of 50 per cent. for realisation from the stock seemed heavy, but it included a large stock of boots not finished, and there was generally a heavy loss in the sale of such goods.  The same applied to the deduction for realisation on the assets for machinery, as second-hand shoe machinery did not fetch much in these days.  The bulk of the machinery was had

ON HIRE-PURCHASE

and it would be seen that £846  5s. was unpaid.  Anybody getting those machines would inherit that liability.  The machines were in excellent working order, but he had not included the figure of £320  5s. in the assets.  The life policy was in the Scottish Union.  This policy and the house did not appear in the books of the company.

  Mr. Palmer went on to state that Mr. Watts commenced business in July, 1918, with a capital of £75, money saved by himself and his wife.  He was previously employed as a factory foreman.  He did well up to the end of 1922.  On Jan. 1^st, 1923, his net capital was £759  3s.  1d., without including the house he had been able to purchase.  The next account was taken on April 9^th, 1924, showing a net loss for the period of 68 weeks of £480  16s.  3d.  The drawings for that period were £267  11s.  7d., and the capital was thus reduced to £10  15s.  2d.  During that period his turnover was £17,985 and he produced 48,345 pairs of boots at an average price of 5s.  5¼d. per pair.  His gross profit was 11.8 per cent. resulting in a net loss of 2.07 per cent., or 2½d. per pair on the average price of the boots sold. The debtor’s personal drawings for that period were £4  5s. per week.  The next account taken was on Oct. 18^th, 1924, after a further period of six months, and for that period the gross profit was £100  5s.  1d.  The drawings were £131  2s., leaving a deficiency of £20  1s.  9d.  The turnover for that period was £7,040 on 18,600 pairs of boots, against an average price of 7s. 5¼d. per pair.

THE GROSS PROFIT

increased to 14 per cent., leaving a net profit of 1.7 per cent., or 1¼d per pair.  Mr. Watts’s drawing was £5 per week.  The next and last account brought the period up to date.  On May 18^th, 1925, the business was shown to have a net loss for the last seven months of £413  7s.  3d., and the drawings were £100  15s.  8d., making a net deficiency as a going concern of £534  6s.  8d.  The gross profit for that period was only 7.4 per cent., which was quite inadequate, and the net loss was nearly 6 per cent.  Mr. Watts’s drawing for that period was £3  7s. per week only, but the reduction in this was accounted for by the fact that £53 was paid into the business by Mrs. Watts, and they were assured that this represented the last of her savings.  The net deficiency on May 18^th, 1925, as a going concern, was £534  6s.  8d., and that figure was reconciled to the figure of £1,000  4s.  1d. in the balance-sheet by the addition of book debts and amounts written off, as already stated, on account of machinery.  Mr. Watts attributed his failure mainly to a very severe illness lasting from August to December in 1923 and another illness lasting from February to Whitsuntide in 1924.  During these periods the business had to be carried on by a manager without Mr. Watts’s supervision.  The immediate cause of the stoppage was the return of two bills amounting to £118.  While yet unaware of this fact, Mr. Watts made out cheques which were not honoured.  As soon as he learned this Mr. Watts determined to put his affairs in the hands of his creditors.  At the end of 1922 Mr. Watts

BORROWED £400

from a gentleman and a further £100 from the same gentleman in 1923, making £500, which was put into the business in the form of a loan.  Of this he returned £50 in March, 1924, and the balance of £450 on April 1^st, 1924.  The man who lent it acted as manager for Mr. Watts, and apparently, not being quite satisfied with the way things were going, he asked for his money back.  At this time Mr. Watts’s house property was mortgaged to cover the overdraft at the bank.  Mr. Watts had no resources whatsoever outside the business and was not in a position to make any offer to the creditors.

  In reply to a question by Mr. F. Corby (Rushden) as to the valuation of the house property, Mr. Palmer said that if anything the house ought to fetch a little more than the figure stated.

  The Chairman said there were only two ways of dealing with the matter – bankruptcy or a deed of assignment - and he asked for a resolution.  He favoured bankruptcy, as he thought it was nonsense for a man to sell boots at 7s. 5¼d. a pair.

  In reply to another question, Mr. Palmer said Mr. Watts had expressed no desire to carry on.

  Four of the creditors present who had known Mr. Watts for some years stated that they had always found him a straightforward man.  They did not want to make him a bankrupt.  One creditor expressed the opinion that, with so much written off in the balance-sheet, the creditors might get much more than was at present expected by the accountants.

  On the motion of Mr. Corby, the meeting decided on a deed of assignment.

  A committee of five was formed with representatives of the four largest creditors, Messrs. Tyers and Bates, Ltd. (Kettering), Messrs. Sanderson, Reid & Co., Ltd. (Leicester), Messrs. Gilpin Bros. (Birmingham), and Messrs. T. Sanders, Ltd. (Higham Ferrers), with Mr. Rock as the fifth.

Transcribed by Gill Hollis