The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-05-26
GREENHUT BELIEVED
STORE WAS SOLVENT
Denies Intangible Assets Were
Written i'm Books to De-
clare Dividends.
TELLS OF "GOOD WILL"

that he was so irmly convinced. even as
late as last January. that the J. r.
Greenhut Company was solvent that he
did not examine closely the balance
sheet for 1914
Ills statements respecting his methods
Of doing business and his conviction that
the ompany would be able to weather
the period Of stress that came with the
declarations Of war In Europe were made
before Referee Peter r. Olney at the
continuation Of his examination in the
presence OF the company's creditors or
their representatives.
James y. Rosenberg. counsel for the
trustees, who 10 conducting tho exsmi-
nation. concentrated his questions on
the consolidation improvement account
and the company's good will. He
brought out the fact nat the first
balance sheet after the consolidation OF
the Greenhut and siegel Cooper stores
did not mention the item afterward
known as consolidation improvement
account" II appeared FIRST on the
balance sheet Of January 1. 1s11-the
( OF consolidation had been fixed n
January I, 1910-As an item Of $780,
a73.7s and VA carried A. IN asset.
Capt. Grsenhut said Il represented
general charges covering the merger of
tie two concerns.
I~ncreasea to eI,140,7B0.
BY the end Of the year 1911 this item
rad been increased 4 s1.140. $780, 20. and
NJ. Rosenberg wanted 10 know whether
----- -
penses OF the business had not been
taken out OF the ledgers and put into
this account as IN asset item. Capt.
Greenhut then explained that the con-
sol!dated company figured out what the
expenses Of the two eparate companies
had been n then added the difference
between them and the expenses under
the consolidation to this consolidation
Improvement account" The item, he
not have existed had there been no
consolidation.
Then these expenses made into as
sets were really expenses incurred in
sugmenting your business"
yes"
Wasn't that creating an asset for the
purpose Of declaring a d~ividend?' asked
Mr.. Rosenberg.
1T was not" replied Capt. Greenhu;
w 't w uEiiiV
hat way"
Mr.. Rosenberg had shown that in thu
nrst balance sheet OF the consolidated
companies an Item OF S1.70o.0O0 had
been credited TO good will. Capt. Green.
hut said this amount didn't reach &c
one-third Of what the company's good
will would have been rated at IL Wal
Street standards had been followed. II,
said tho financial statements issued b,
the company did not Indicate just wha'
this asset OF S1.700,0 900 and the 'con,
solidation improvement account asset
Of $1.14O.750.25 were. He said the state
ments spoke for themselves and that II
was not necessary to indicate what thes,
items stood for In a general statement Of
financial condition.
In reply to other questions Capt
Greenhut said that at the beginning OF
1910 the physical assets of the con.
eol!dated concern were $4,000. 900. which
was 81, 500, 900 less than the stock issu,
Of the new or consolidated concern.
Views on Good WILL"
Then the only asset on which tn,
stock was issued was good will@'
Yes. and only a part Of that. W
could have increased the stock had W,
wished and still been right
Capt. Greenhut said IL was not tru,
tndt rne concentrated company tssuflet
the responsibility OF $4,000 900 in bond
nd increased the capital stock on
good will that did not exist. becaus'
while neither the Greenhut Compan.
nor the Siegel Cooper Company hat
carried good will on their books as al
: asset, nevertheless the good will di'
exist As a fact and the consolidate
company had a right to avail itself of
as an asset. He admitted the result o
NhA hAAEEAapfp NJ tNphnr sha NnnanttIa sfn,
was the appearance OF two items Of as
sets, ''consolida lion improvement &C
count" and good will neither of whicl
was a tangible asset, He added tina
during 1905. 1909 and 1910 the profit
OF the two companies averaged s7is,00
a year and that the good wllr' iter
"wasn't all wind by a long shot"
In saying that he considered the com
pany so purely solvent that he neithe
thought about " nor talked To himself
Capt. Greenhut explained that in hi
consideration of the company's STANDING
he estimated that its real estate wa
worth the book value. Recent ap
praisals, II was announced yesterday
chow that In the present condition o
the real estate market the realty woul
bring about 5000 900 more than IN
first mortgages OH these properties cal
for. This would leave an equity of tina
amount to satisfy the holders O
100000 of second mortgage bonds,
sG.25O in Interest Due.
The interest on the mortgage on tn
warehouse Of the company now due |
e6,25o. II must be paid by the end o
the month or the United States Trus
Company will foreclose, II was decide
yesterday. after considerable discussion
during which Saul S. Meyers. counsc
for the Independent Creditors Com
mittee. maintained hat the holders o
the second mortgage bonds should pa.
II. that this interest shall be paid b
the trustees. counsel for the Unite
States Trust Company TO stipulat,
however. that no foreclosure proceed
ings shall be instituted for at least ri
months and counsel for the second mort
gage ~bondholders to stipulate tina
should II be finally determined that tn
trustees ought not to have paid the In
terest the amount so paid now shall b
considered by the bondholders as a divi
5 dend and deducted from the amount @
their claim.
A. the opening OF the hearing Cap
Sreenhut said he wished to correct
possible conclusion that he ha
squeezed the life out OF Henry Siegel
in buying out his interest in the Siege
Cooper Company. He explained TIA
three years before. when he bough
100000 worth of stock from Siegcl /
order to get control of the mpa h
had paid Siegel $500, 900. He said h
told Fiegel at the time he bought ou
Siegels entire interest In the concer
that he was merely getting even 10
the bard bargain Siegel drove IN .ns
him thrao before.
The hearing will be continued mex
Tuesday afternoon,