Sunday, 29 April 2012

That Pattison's Accountants Report

Oh dear. When the accountants finally presented their report the news wasn't good. There was an £80,000-odd hole in the accountants. Creditors wouldn't be getting 20 shillings in the £.

The size of the article telling the bad news confirms the importance of Pattison's failure. It takes up a quarter page. That's densely packed small print on a broadsheet. It's so long, I've had to cut it up into chewable slices.

We're starting with the balance sheet itself.

DEFICIENCY, £82,793.
As briefly reported in last night's Pink Edition, a meeting of the creditors of Messrs Pattison, Limited, convened by the Secretary of the Company, Mr Young, of the firm of Messrs Boyd, Jameson, & Kelly, W.S., Leith, was held yesterday in Lowell's Rooms, George Street, Edinburgh, for the purpose of considering certain proposals to be submitted by the Auditors, Messrs Tait, C.A., Edinburgh, and Murray, C.A., Glasgow.

Mr James Ainslie presided. The meeting having been made open, Mr Tait explained the steps which had been taken preparatory to calling the meeting and the meeting held last Friday. He stated that at the meeting last week of the leading creditors the whole position was explained, and the accountants suggested that there should be a scheme of reconstruction practically to bring the concern into form once more. He would just like to say that personally he was of opinion that there should be reconstruction, that it would be nothing short of a national calamity to allow a business of this kind to go to the wall. With that view he had framed a scheme of reconstruction. That scheme would be read to the meeting, and if they did not understand it he would explain. The report of investigation was then read.

The following state of affairs was submitted to the meeting:-

as at 6th December 1893.
Prepared by John Scott Tait, C. A., Edinburgh, and Robert Alexander Murray, C.A., Glasgow.


I. -Heritable properties, per valuation by Mr W. Maiden Beattie- 

(a.) Nos. 166-172 Constitution Street, Leith
£9,500 0 0 
(b.) No. 13 Bond, South Side Old Wet Dock (lease for 21 years from Whitsunday 1896)
6,000 0 0 
(c.) Bonded warehouses, Breadalbane Street., Leith
43,866 0 6 
(d.) Brewery, Duddingston (including plant, utensils, &c.),
23,769 0 0 
(e.) Warehouse, 62 and 64 Yardheads., Leith
5,300 0 0 

£93,435 0 0 
Plant, utensils, machinery, furnishings, &c,
5,378 14 6 

£98,813 14 6 

II. -Plant, utensils, furnishings, &c, at branches, estimated value, say,
2,186 5 6 

£101,000 0 0 

III. -Stocks of whiskies, wine, beer. &c , as per valuations by Messrs William Sanderson, R. S. Gray, and James Pringle : (A.) Total amount of valuations, £333,729 6s 8d : (B.) consignments &c, valued at £2389 16s,
386,087 2 8 
IV. -Balances due on open account,
240,653 6 8 
V. -Bills receivable not discounted,
36,936 5 5 
Whereof-Trade. .. £25,051 16 1 
Accommodation,   11,883 8 10
VI. -Investments,
24,368 0 9 
VII. -Balances due by bankers
405 8 5 
VIII. -Cash on hand
5,661 7 4 
IX. -Balance due by Sydney branch, as per cablegrams,
18,522 18 0 
X. -Bills receivable, current, and under discount, £442,649 15 3 
Whereof-Trade, 263,712 3 6 
Accepted for the accommodation of Company, Head VI. of contra 178,937 11 9 
XI. -Sundries,including show cards, mirrors, .stationery, &c valued at
7,000 0 0 
XII. -Balances due by acceptors under accommodation bills on which the Company appears as drawer
13,895 1 1 
XIII. -Balances due by drawers under accommodation bills on which the Company appears as acceptor, 
3,083 5 5 

£837,606 15 9 
Deficiency, subject to adjustment,
82,793 14 1 

£920,400 9 10 


I.-Bonds secured over heritable properties,
£9,400 0 0 
II -Balance due on open account,
79,111 16 4 
III. -Bills payable,
377,267 4 10 
IV. -Balances due to bankers, including interest to date,
194,687 17 4 
Note.-Certain assets are held by the banks by way of security. 

V. -Vendors
3,367 7 10 
VI. -Liabilities in respect of bills receivable- 

Total bills receivable, £479,585 0s 8d. Discounted (Branch X. of Contra), £442,649 15s 3d. Not discounted (Branch V. of Contra), £36,935 5s 5d. Bills accepted for tbe accommodation of the Company, as per contra-Discounted (Head X. of Contra). £178,937 11s 9d. Not discounted (Head V. of Contra), £11,883 8s 10d,
190,821 0 7 
VII.- Contingent liabilities, including bad debts, discount, and outstanding accounts
65,755 2 11 
VIII.-Obligations undertaken by the Company for third parties
£920,400 9 10

Dundee Courier - Wednesday 11 January 1899, page 2.

In case you still doubted how big a deal this bankruptcy was, the phrase "national calamity" should definitely sway you.

I was surprised that the brewery was worth less than 25,000 quid, including all the brewing kit. Why then was it first put on auction with a reserve price of £50,000? Were they being cheeky, or was this valuation unrealistically low? As we'll discover later, the brewery was eventually sold for more than the valuation. So I'd say £23,769 is definitely on the low side.

You can see that the major asset of the company - making up almost half the value - was their stock of whisky. Which must have been a worry to creditors, for a couple of reasons. First, the whisky trade was in poor shape and the value might decline. Secondly, it was a difficult asset to sell quickly and there were only a limited number of possible buyers. And, should that much whisky come onto the market at once, it would drive down prices further.

We'll also find out that those stocks of whisky weren't quite what they seemed. But we'll have to wait until the Pattison brothers are in the dock for that. Let's just say that they weren't worth as much as stated here.

Looking at the liabilities, that £200,000 owed to the banks jumps out. They were the ones who pulled the plug. Even though they had security for the debt. The other creditors weren't always best pleased with the actions of the banks. But - you guessed it - we'll learn more about that later.

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