273
PUBLIC RECORD OFFICE
Reference :-
THILLICO.885/25
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
10006
30
No. 29.
HONG KONG.
THE GOVERNOR to THE SECRETARY OF STATE.
(Paraphrase.)
(Received 10.41 a.m., 1st March, 1916.)
TELEGRAM.
[Answered by No. 37.]
WITH reference to your telegrams of the 10th and 22nd February,* in code, respecting liquidation of enemy firms :-
1. Very little immovable property is owned by German firms here. Prac- tically all their shares in public companies are pledged. Except in one or two cases, where there are sufficient assets already, increase in available assets by adopting your proposals will therefore be very small.
2. Despatch follows by mail respecting sale of trade-marks and goodwill. There are local objections to sale of trade-marks, and sale would realize little.
3. I assume that the private estates of partners of insolvent firms may be old.
4. Disclaimer will be introduced. It will apparently apply practically only to leases which in many cases were settling themselves. I propose, subject to your approval, to save liability of liquidated firms under disclaimed contracts.
5. I venture to deprecate provision that after liquidation no action may be brought against liquidated firms. Some of the liquidations will result in & deficiency, but, as a whole, the firms may be solvent and may resume here after the War. This has a bearing on disclaimer and on the sale of goodwill.-MAY.
12632
No. 30.
COLONIAL OFFICE to BOARD OF TRADE (COMPANIES DEPARTMENT). [Answered by No. 33.]
SIR,
Downing Street, 15th March, 1916. I AM directed by Mr. Secretary Bonar Law to refer to the report of the recent Interdepartmental Committee on the subject of the liquidation of enemy firms in the British Colonies and Protectorates, the Board's concurrence in the recommendations of which was signified in your letter of the 14th January. § That report was made before the passing of the Trading with the Enemy (Amendment) Act, 1916, and it seems likely that in one or two respects the procedure to be adopted under the Act will differ from that recommended by the Committee, while on other points not definitely dealt with in the report it would appear desirable that the procedure to be adopted in the United Kingdom and overseas should be so far as possible uniform.
2. In particular I am to ask that the Board's attention may be called to the following pornts:--
(a) The Committee recommended that after the completion of any liquidation no action should be allowed to be brought in the Colony or Protectorate concerned against a liquidated firm or company, or against any of the members or remaining assets or against any official or other person concerned in the liquidation of the firm or company,
for any debt incurred by it prior to the liquidation, and also that the liquidation should not extend to the private estates of individual partners.
Mr. Bonar Law understands that the present intention of the Board of Trade is not to include in the liquidation of enemy firms under the Act of 1916 the private estates of partners, and not to cause limited companies which are wound up under Section 1 (1) (b) to be struck off the register. The result of this would presumably be that liquidated firms and companies would continue to exist after the completion of the liquidation, and would be liable to be sued in the United Kingdom in respect of any unsatisfied claim against their assets, while, in the case of partnerships, creditors would, in the case of insolvency, be able to have recourse to the private property of the partners in the ordinary way.
31
Mr. Bonar Law would be glad to receive more definite information of the policy the Board of Trade intend to pursue in regard to these points.
(b) The Committee recommended that the claims of non-enemy creditors should be paid if possible in full, irrespective of those of enemy creditors, no provision being made for these latter by way of dividend or otherwise. This recommenda- tion appears to some extent to be at variance with the policy contemplated by Section 1, Sub-section (3), of the Act of 1916, which provides that, subject to the limitation contained in Sub-section (4), any unsecured debts due to enemy creditors should be allowed to rank next after unsecured debts due to creditors who are not enemies. Moreover, while Section 1, Sub-section (3), of the Act of 1916 appears to provide that only debts due to persons who are legal enemies (that is to say, resident or carrying on business in enemy territory, or treated as though they were so resident or carrying on business) are to be postponed to other debts, the Committee's recommendation has been interpreted as extending to all persons of enemy nationality wherever resident.
The policy recommended in this respect by the Committee was, as will be seen from their report, only a confirmation of the practice already existing in the Colonies and Protectorates, and Mr. Bonar Law does not desire to alter this prac- tice unless the Board see any strong reason for such an alteration. He would, how- ever, be glad to receive any observations which the Board may desire to offer on the points raised in this paragraph.
(c) No instructions have at present been given to the oversea Governments concerned with regard to the position of the secured enemy creditor, and Mr. Bonar Law would be glad to be informed what course the Board of Trade propose to adopt in this respect. As at present advised, he is inclined to think that such creditors should be allowed to rank with the unsecured non-enemy creditors, but only to the extent of the value of their security if less than the amount of their debt, and that the amount found due to them should be held by the Government pending further instructions.
A com-
(d) A further question has arisen with regard to the desirability of admitting against the assets of liquidated firms the claims of enemy subjects who have been employed as officers and servants of liquidated companies and firms. munication has already been addressed to the Board on this subject, see Colonial Office letter of 4th March.*
(e) Finally, I am to call attention to the fact that none of the Colonial laws under which liquidations are being carried out contain any provisions similar to those of Section 1 (4), and to ask whether the Board consider it desirable that stens should be taken to secure the introduction of such provisions.
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SIR,
No. 31.
CEYLON.
I am, &c.,
H. J. READ
THE ACTING GOVERNOR to THE SECRETARY OF STATE. (Received 20th March, 1916.) (No. 97.)
The Queen's Cottage, Nuwara Eliya,
Ceylon, 23rd February, 1916.
I HAVE the honour to acknowledge the receipt of your despatch No. 699, of the 2nd of December, 1915,† with regard to enemy firms in Ceylon.
2. I regret the delay in answering this despatch, which has been due to my desire to obtain the views of the Chamber of Commerce as to the necessity, or otherwise, in the interests of the trade of the Colony, of keeping the firm of Messrs. Freudenberg & Company in existence.
The question really only affects this one business, as the other enemy firms ceased to exist for all practical purposes when the partners or managers were interned, with one exception-that of George Boysen & Company, whose affairs are being wound up by a firm of chartered accountants. I understand that the process of winding up is now almost complete.
* Nos. 22 and 25.
† No. 54.
1 No. 2.
§ 2829.
* 6241.
+ 51780.