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THE WELSH FLANNEL TRADE.

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THE WELSH FLANNEL TRADE. Reports on Montgomeryshire Companies. In the annual report of the Board of Trade under section 29 of the Companies (Winding-up) Act, 1890, the Inspector General draws special attention to a few of the more important cases of company insol- vency. We give below his reference to two Welsh companies Welsh Manufacturing and Wool Stapling Company, Limited.—Duration, three years. Formed to acquire tltcl extend woollen manufacturing and warehouse busiogBB at Llanidloes and Merthyr Tydfil. The purchase priQfrbf the whole of the properties taken over was which was paid as to £ 7,000 in fully paid-up shares, A,698 in cash. The result of the vendor's trading Wm not disclosed to the public, but a statement appeared:in the prospectus to the effect that the directors were aZk to-state that the profits of the business would pay a Jtry substantial dividend on the whole of the capital isstjsh According to the prospectus the amount of subscriptions required was £ 15,000, but subscriptions for £ 6.346 ojBy were received. Upon this, however, the directors v&Lt to allotment, and as a result were obliged to w money in order to carry on the business. The I)orrcnitd capital amounted to upwards of XIO,(Km), and was seciSlpd by debentures for £8,700 and a general mortgage over all the assets of the Company. The Companv never a profit, and eventually it became so helplessly insorfct that the mortgagees took possession of the property Bid discontinued the business. The estimated value of the assets is £ 8,675, which leaves a deficiency of £ '2,074.as regaids the mortgagees. In addition, there are unsecTjiitHl creditors amounting to J:3,179, which, with £5,852, the amount of the paid-up capital, makes a total loss to the public of £ 9,031. The cause of failure is stated to i,)e the decline in the woollen industry owing to the intro- duction of flannelette, for the manufacture of which the mills were not adapted, but the insufficient subscription of capital is of itself sufficient, to account for the failure. George Morgan and Co., Limited, Newtown.—Dura- tion, four years one month. Formed as to the busmen" of one George Morgan as a manufacturer of Welsh flannels in Newtown. The premises and assets of the business were sold to the Company for X5,000, the Com- pany also taking over the liability of a mortgage for .£4,200. and trade debts of .£2,100. A prospectus was issued offering for subscription shares for £ 16,000. It was stated that for the previous six years the average profits shown were sufficient to pay a dividend of 6 pm- cent. on the preference shares and 7 per cent. on the ordinary shares, and that the property was valued at £ 16.091 4-s 7d. It was also stated that "the retirerw.t of Mr George Morgan's partner from business affords the opportunity for bringing out the Company." The directors decided to go to allotment on a subscription of = £ 5,350 only, which, after making necessary payments, left a working capital of £ 7o0 onlv. About £ 4.i0o w&s. however, raised on mortgage debentures. Dividends of 6 and 7 per cent. were paid in 1892 and 1893, but the business was in fact carried on at a loss from the com- mencement. After the directors knew that the Commfciay was hopelessly insolvent goods were obtained on cSpht to the extent of £ 3,045, the greater part of which is fjtill outstanding. Morgan, however, received his salary -as managing director, and was allowed by the other direc- tors, who were connections, to appropriate £5f>() of-the Company's funds as payment of salary in advance. The debenture ^holders ultimately took possession and con- tinued the business. The assets are estimated as insuf- ficient to satisfy their claims, and there are no aMete for the shareholders who have paid up t5,472, or the unse- cured creditors for £ 3,395 5s 5d.

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