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Your company was very urgently in need of money when you went into liquidation? Ever since July of last year.
You have been urgently in need of money since July of last year. I think the first five months of this year you have been carrying on your business at a loss ? And that has been reported to the directors several times.
And your need increased day by day? Yes, on the other hand we always had before us what we had actually achieved.
Your need of money was so urgent in fact that you could not raise the necessary fees for solicitor and counsel to fight an action that was coming out in this court? Perfectly correct and we had a good case.
I want to go back to the balance sheet again under heading "Mortgages, Loans and Investments". I want to go to the item Short Term and At Call $349,630.00. These are items we have just been dealing with. $345,630.00 out of that amount represented loans to shareholders ? I think you are
right. I think all of it did.
What was the collateral security held on those loans ? Cash that the shareholders had paid without any obligation on their part to do so.
But you have no cash against this. You never had $200,000.00 ? If I did not have the cash, I could never had made the loan.
I am just putting in one receipt to show the form these transactions took. (Ex.NIB 19).
Do you consider that that is an appropriate way to describe these transactions in your balance sheet as "Collateral Security Loan Short Term and at Call" ? I can think of no better way of terming it even now.
Judge:- Collateral security is very material is it not?
Judge: In your case it was simply intention to pay when called on ? Yes, My Lord.
Yes.
When these loans against call in advance were made, a receipt was signed by the applicant in that form acknowledging the receipt of a certain sum of money and at the end of the note it says "I agree that this loan if accepted shall be a lien on the said shares etc
In this form I believe all
of them were conducted ? That is the form laid down. Whether there was any exception I do not know, and would you note that each one of them contains a receipt for cash.
penultimate paragraph. This answer if made (which I doubt) does not convey my true meaning.
Yes, I observe that it is a receipt for cash. When did you first begin to have any doubt about the soundness of these assets ? In the case of one or two individuals quite early; in the vast majority of them, I had no doubt in respect of them until we had to lean upon them.
Did the directors of the Company make an arrangement, to which you were a party, that in respect of debts due from shareholders it was optional for them to take out bonds maturing in ten years ? I entirely agree.
24.