The Express.
London, England, 1866-05-24 00:00:00

COMMERCIAL BANK CORPORA
EAST.TION OP INDIA
AND THE

An extraordinary general meeting of the share-
holders of this bank was held yesterday at the London
Tavern ; Mr. J. J. Lowliness in the chair ; for the purpose
of considering the beat means of winding up the company.
The Seoarraer (Mr. D. Allardice) having read the
notice convening the meeting,
The CHAIRMAN stated that since the meeting of the 23rd
of April, he regretted to say that circumstances had arisen
which had compelled them to suspend the operations of
the bank. Shortly after the meeting was held they re-
ceived a communication from the London Joint Stock
Bank, to the effect that, owing to the manner in whichthe
shareholders had received the report of the directors, they
felt compelled to withdraw the credit for 200,000/. which
they had with that bank, and which was a yearly credit
expiring on the 20th of June. The directors had several
interviews with those of that corporation, and they were
for some time in hopes that they would induce them
to alter their determination ; but shortly after-
wards they received telegraphic &dykes that considerable
drafts were coming before them from their foreign agents,
which would have exhausted the credit granted by the
London Joint Stock Bank to a considerable extent. Those
telegrams were accompanied by advice, to the effect that
cover would be sent by subsequent mails for the over draft,
but, unfortunately, the application which they had in con-
sequence to make to the London Joint Stock Bank was
made at a time when the first squeeze of the very severe
credit panic was experienced, and the London Joint Stock
Bank felt that unless tangible security was offered it could
not render them assistance. The China mail arrived on
the 14th inst., and if the London Joint Stock Bank
had accepted the drafts brought by it their credit with
that bank would have amounted to 243,0001., whereas, the
actual indebtedness of this bank to them they not accept-
ing such drafts, was 140,000/. At the time they went to
the London Joint Stock Bank for assistance they had
telegraphic advices that draftawould be sent by the Bombay
mail for 9 lace, or 90,000/., and they were, of course,
compelled to acquaint the London Joint Stock Beek of
the fact that between the arrival of the China mail, on
the 14th, and the expected arrival of the Bombay mail,
which arrived last evening (the 22nd), they would not be
in a condition in any way to cover their drafts, and under
those circumstances the London Joint Stock Bank felt
that they could not prudently accede to their application,
consequently they were obliged to suspend operations.
The shareholders were aware that the Bombay agency
got itself into considerable difficulties last year, which
difficulties were fully placed before them in the month of
June, and Mr. Cartwright, one of their directors, who had
gone to Bombay to look into his own affairs, told them
that to his great surprise Mr. De Quadros, their agent,
had been lending large sums of money upon securities of
very doubtful value, and that he very much questioned
whether it would ever be got back. The whole amount
he found outstanding was 75 lace, or 750,000/. In
consequence of that letter, and communications from
the agent himself, showing the difficulties in which
he was placed, it was resolved to send out Mr. Angus, the
chief manager, who bad not long before been at Bombay,
to make a thorough investigation, and to realise with all
convenient speed, without regard even to the popularity
of the bank. The directions framed for Mr. Angus's in-
struction were extremely stringent, and authorised him to
take severe measures in the interest of the bank where
such were necessary, and he was to realise at any sacrifice
which was not ah absolute sacrifice of the assets of the
agency. Mr. Angus accordingly proceeded to Bombay,
and from time to time informed the directors of the steps
he was taking to secure the assets. His communication
also contained a report of the state of affairs, for the pur-
pose of the results being stated in the balance-sheet to be
submitted to the shareholders at the April meeting, and a
careful examination of the accounts showed that the
total sum outstanding amounted to 796,000/., and of
that amount Mr. Angus estimated that 89,000/.
would be lost. Mr. Angus returned on the 9th
of April, after the report was prepared, end before
it'.waa submitted to the shareholders, and he
informed the board that such was the state of affairs in
Bombay that it was impossible to realise anything at pre-
sent, and that almost the whole of the sum he had men-
tioned was now outstanding. The sum, therefore, which
was locked up in the Bombay agency must he taken at the
whole amount of 796,000/. It appeared from a report from
the Shanghae agency that on the death of Mr. Wiggins,
their late manager there, the amount of 681,0001. was out-
standing, the greater part of it being on good securities, it
being advanced to large merchants, and in sonic cases on
land. The amount outstanding on other agencies was in
all 1,696,108/. The bank having suspended, the question
for the shareholders was, what was the best course to pur-
sue under the circumstances, and provided they could get
the consent of the creditors ; because any decision the
shareholders came to must be subject to such consent. It
was plain that it was impossible to realise their assets at
once without very considerable losses, and probably, there-
fore, the shareholders would consider a voluntary winding
up would be the most desirable way of realising
the assets; but upon that point they bad taken
counsel's opinion. There were three modes of winding up ;
the first was under the deed of settlement and charter,
which authorised the court to proceed to wind up on its
being certified by a joint report from the court and the
auditors that the business of the company could not be
profitably prosecuted ; another mode was to wind up either
voluntarily or compulsorily under the Joint Stock Com-
panies Act of 1862, which however necessitated the regis-
tration of the company, and required the consent of all
the shareholders ; and the third mode was to pio com-
pulsorily to wind up under the Winding-up Act, in which
an official liquidator would be appointed by the Court of
Chancery, and all further proceedngs would be under the
direction and with the approbation of that court. At first
sight it appeared not so desirable to wind up in that man-
ner, because an official liquidator might not be so interested
in the affairs of the bank as a large shareholder; but it
had the advantage of preventing any creditor from taking
a hostile step. He believed that there would be
little difficulty in inducing the creditors here, chiefly con-
sisting of large banks, to act in a manner which would
benefit the shareholders ; but unfortunately they had to
consider the creditors at the different agencies, who would
probably throw much difficulty in the way of winding up
voluntarily under the deed of settlement. The board had
accordingly taken the opinion of eminent counsel, one of
whom was Mr. Mellish, of the common law bar, and having
put the three alternatives to him, they had received the
following reply in answer to the general question, " What
in your judgment is the best mode of winding up the com-
pany, having regard to the three alternatives!" " Having
regard to the position of the affairs of the corporation, the
probable proceedings by creditors abroad against the assets
of the corporation, and to the period which must necessa-
rily lapse before the company could be wound up, either
under the provisions of the deed of settlement or the
charter, or could be registered and wound up under the
Companies Act of 1862, we are of opinion that the
compulsory winding-up will be the most expedient
course to adopt. We think the position and status of the
official liquidator would facilitate any proceedings which it
was necesss y to take in India or China, and to secure the
protection of the assets abroad for distribution among the
creditors." That really embodied the whole of the case,
and he thought, under the circumstances, it was the best
course to adopt.
Mr. PARAVICINI inquired whether the shareholders
would be permitted to name the official liquidator without
any opposition on the part of the board.
The CHA IRMA N --C,ertiunly, with the consent of the Court
of Chancery, and great weightno doubt would be given to
their recommendation, provided the creditors did not
oppose. It was entirely &question for the shareholder's.
Mr. ANGUS then read a balance sheet, drawn out by him
after investigating all the security, which showed a total
estimated loss of 502,769 i., leaving a capital of 824,6491.
Mr. HARRISON stated that it now appeared that
796,000!. of the capital had been lent on shares, which
was strictly prohibited by the deed of settlement and the
charter, and he inquired whether that was done with the
knowledge of the present directors. He had taken a very
large interest in this concern on the faith of the honesty
of the directors, and not, when the bank had collapsed,
he found that four-fifths of the capital had been expended
upon these rubbishing shares. The interest of the direc-
tors in the bank was as nothing compared with his, and he
wanted a distinct answer to his question.
Mr. ANGUS stated that the advances were made entirely
without the knowledge of the directors.
Mr. HARRISON—This board was only formed two years
ago, and by their own admission they have lost more than
half a million, and have put in jeopardy 800,000/. more.
They have shown the greatest imbecility and incompe-
tence, not to say worse, and it is impossible to be other-
wise than indignant at the conduct of persons who profess
to be able to manage other people's money and who
throw it away in this manner. (Hear, hear.)
Mr. Antics, in reply to a question from another share-
holder, informed the meeting that no loss, to his know-
ledge, had occurred under the head of bills receivable, but
that as they became due they were paid or replaced by
others.
Mr. PARAVICINI said that it was quite evident they
must wind up, but be should like to hear the correspond-
ence between Mr. Cartwright and the board.
The CHAIRMAN then read the correspondence, com-
mencing with a letter from Mr. Cartwright, dated Bom-
bay, May 13th, and received on the sth of June, stating
that he was surprised to find how much money had been
advanced by Mr. De Quadros on shares in various under-
takings and schemes which had filled Bombay during the
past two years, and which advances, 56 lees of which, ac-
cording to Mr. De Quadros' statement, had been sanc-
tioned by the original board, seemed to have been made in
• time of general confidence. He did not impugn the
judgment or discretion of the board, but he must point
out to them that those undertakings were very poorly re-
presented in the market, and that the sooner Mr. De Qua-
dra@ got in the money the better; but he warned them that
any undue pressure would precipitate matters and cause
serious loss, there being universal distrust at Bombay. He
also read a letter, dated the 17th of May, which reached
England on the 16th of June, in which Mr. Cartwright,
after referring to an attack of illness, which prevented
him from going to the bank and investigating matters im-
mediately on his arrival, and stating that he had seen Mr.
De Quads in April, when he assured him that all was
going on properly, expressed his astonishment and
alarm at finding, on subsequently going to the bank and
making a cursory investigation, the enormous amount of
the loans, and expressing his opinion that Mr. de Ouadros