Music Trade Review
Issue: 1913 Vol. 57 N. 16 - Page 11
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE MUSIC TRADE REVIEW
RECEIVER'S REPORT OF FARRAND CO. AFFAIRS.
Detroit Trust Co. Issues Complete Statement Regarding t h e Condition of That Concern so F a r
as Can Be Determined at t h e Present Time—Total Liabilities $823,925.88, of Which
Only $313,451.36 Are Direct—Assets $563,513.04—Statement Accepted a t Face Value.
(Special to The Review.)
. DETROIT, MICH., October 13.—The Detroit Trust
Co., receivers for the Farrand Co., has issued a
statement of the condition of the concern as far
as it can be determined at the present time. It
has required nine weeks to compile the figures
given herewith.
In substance the statement shows that there are
total liabilities "as far as known to the receivers,"
of $823,925.88, exclusive of half a million dollars^
of common and preferred stock, and total assets,*
as a going concern, of $563,518.04. What the as-
sets would total in liquidation the receiver does
not attempt to State.
"The assets of a manufacturing plant naturally
are worth considerably more as a going concern
than in liquidation," said J. A. Bower, assistant
^
the company just a few days prior to our appoint-
merit as receiver.
The name "Colby Company" was a trade name
owned by the Farrand Co. and its assets belong to
t h e Farrand Co.'s estate, and for that reason we
consolidated the affairs of both companies in the
statement.
The following is a statement of the assets and
liabilities as found by us and which appeared on
t h e books of the company at the time of our ap-
pointment:
A S S £ T S Q F T H £ F A R R A N D COMPANY, CLOSE OF
BUSINESS AUGUST 6, 1913.
Cash: On hand in office
$246.22
On deposit in bank
_._A 8 ^!!
$ 4 3 4 5f>
Bills Receivable:
£n hand in office .. -Sis.™?-"
'
Discount with banks. .410,131,86
secretary of the Detroit Trust Co., to The Re-
view. Mr. Bower has direct charge of the affairs
of the Farrand Co.
The direct liability, however, is only $313,451.36.
The remainder, $510,474.52, is indirect liability in
'
^
>
J
>
—
Less contingent liability
—$429,141.23
4io,m.86
$ i 9 , 0 09.37
Less reserve for shrinkage
9,500.00
. .,
D
Accounts
Travelers' advances.
Farrand Co. custom-
tracts. Upon the amount of shrinkage in the value
o: these items will depend the total direct liabili-
ties when the affairs of the company are wound
,,
T-,
. . . . . . . .
up. Mr. Bower states explicitly that it is impos-
sible to make an estimate upon how much the as-
Less res., shrinkage. 35,000.00
00,324.03
C o l b y Co. customers'
accounts.
$21,318,09
Res. for s h r i n k a g e . .
5,000.00
i6,3is.O9
"
'"
$2,819.38
„„.
ers accounts
$8c>,324.03*
$69,461.50
« u will realize if the company is liquidated. As "TS?^!^«K2i.
the direct liabilities are about a quarter of a mil-
lion dollars less than the assets, it appears that the
creditors at least ought to be paid in full.
T
A 11
'
11 . u
•
u-
Less mfrs' equities.. 9,917.21
$ioT566~59
Contracts discounted 97,375.39
J
$198,941.98
J. A. bower manages ill the receiverships under-
taken by the Detroit Trust Co., and as he has
...
.
.
.
.
. . _
, „
hitherto met with signal success his rarrand Lo.
statement is accepted by financial men here as a
true reflection of conditions and as a forecast of
what the settlement will be. It was he who
brought the CloUgh & Warren Co. through its dif-
ficulties, and he is now handling half a dozen other
important receiverships. The statement in full
Less as follows:
, Contracts discntd. $97,375.39
Res. on contracts
.
discounted a n d
. company^ 0 ""! 32,11730
.
65,258.09
$133,683.89
Less reserve for shrinkage
13J368.40
pia)w Contracts
from Sale of Consigned Goods:
The Farran.l contrcts$H6,042.56
A
» t s equity$37,610.78
Shrinkage.. 35,365.77
follows •
iunccwi,.
To the Creditors of the Farrand Co.
j.
T
, ,
.
•
.
.
$43,066.01
Immediately upon our appointment as receiver
of the Farrand Co., of this city, we issued a cir-
.
.
,.
, , 1 1 1
,
1
cular letter to its creditors and stockholders dated
August 7, 1913, notifying them of our appointment
as receiver and explaining the reasons given by the
officers and directors of the Farrand Co. for such
Co]by Co
contrcts ..
Shrinkage..
p iann
998.26
6,015.26
.
~T.
$8,948.38 . $ 5 2 O 5 0 s g
Settlement Contracts Accepted from Dealers:
The Farrand Co..... $66,831,84
Less dealers
We took an inventory of all the property of the
company and had the books examined for the pur-
.
.
- i l l -
, , ,
. ,
J
.
..
,
,
1
i-
r
1
i
.
.
. . .
10,067.28
. $25,167.36
•
3,8ii!80
$n,435.3i
Receivable:
C o acc>ts
$80233 . 55
The Colby Co. ac'ts 41,654.81
$121,888.36
L e s s re serve for shrinkage.... 40,629.45
$8i,258.oi
London, England, Branch:.
Cash, accounts and piano contracts
Factory Inventory .-
Plant Equipment—
11
Machinery,
$22,642.13
pulleys
ar ,d
belting
$32,990.62
Shafting,cou P lings &
5e8B1
Tools and fixtures..' 24,234.57
T'fn^^qu^pment 1 ' 8 . 11 ." 1,397.26
Automobile, horse,
office
and shop
f urn & fixtures
a
"d misc. equip.. .^24^024.67
Materials & supplies:
3 g l g 93
Supplies in stock... $31,417.94
Lumber
20,893.54
,
At the time of our appointment there were a
number of .orders still unfilled that had been placed
by the company for material and supplies which
were "special" in so far as they would not be of
F
.
Farrand
• r i ] P
,
'
Less reserve for shrinkage
.
.
It was the general policy of the company to sell
the largest proportion of its product upon consign-
ment or long terms. It is our intention, however,
to discontinue that policy, although in some in-
stances it may be necessary to continue as in the
,
.
.
.
. .
.
past in order to support the business of the agent
in order to liquidate his obligations with the
smallest loss, but in most instances this will not be
'
$40,414.47
$35 23464
held by disc. co...
Consigned Accounts
ceiver should be with reference to continuing the
operation of the plant.
.
.
.
.
,
f
T
It is our intention to continue the operation o*
the plant indefinitely, as the company has a large
..
,
.
,
stock of material and supplies on hand and sev-
eral hundred pianos, player-pianos and organs in
the course of construction.
26,417.37
—
g ^ f h ^ ^ S
• discounted a n d
pose of acquainting ourselves with the business and
the property in order that we might know the
value of the assets and arrive at some decision at
an early date as to what the policy of the re-
,
equity.
•
.
$14,999.64
Agts equity $5,017.00
appointment.
/
72,976.55
•
Veneer
io,956.7i
156 54
- $63
Music
494 43
' '
Musical instruments in
prog, of manfr:—
J
Pianos and players. .$129,696.49
use to any other manufacturer, and by pursumg
Organs
our operating policy most all the orders for sup-
plies and materials will be filled and the goods ac-
,
, .
.
, . ,
,
.
. j
Less reserve
cepted by us so that this large and undetermined •
liability will be eliminated and will accrue to the
"
'
.
.
.
.
The branch at London, England, is being liqui-
dated, as arrangements for its sale were made by
3,800.59
$133,770.08
$280,410.44
for shrinkage
84,000.00
. 196,410.44
7
!pi)Pt>,olo.v4
*There are on hand notes and niano contracts received
from dealers and placed with the Farrand Company as ad-
^eS^^t*"
e
LIABILITIES OF THE FARRAND CO. AT CLOSE OF
BUSINESS AUGUST 6, 1913.
,
I'nsccurcd Direct Obligations:
l'.ank loans
54,600.00
Hills payable to mdse. creditors 04,118.16
Accounts payable
53,354.49
Customers' credit balances . . . .
5,092.85
Accrued payroll and salary acc't
7,285.86
$258,851.36
Secured Direct
Bank loans
Obligations:
54,600.00
$313,451.36
(There are only two secured creditors and they
have $66,858 79 par value of piano con-
tracts and a chattel mortgage on 250 in-
struments at the plant.)
Indirect Liability, Shown in Statement of
Assets, as Follows:
Bills receivable dis-
counted with banks$410,131.86
Mfrs. e q u i ties in
contracts
9,917.21
Piano contracts direct
(disc, less res.) . . 65,258.09
Piano settlement con-
tracts (discounted
less reserves) . . . 25,167.36
$510,474.52
Total direct and indirect liability
Capital Stock:
Preferred stock issued
$200,000.00
Common stock issued
300,000.00
•
$823,925.88
500,000.00
Total obligations known to receiver. . . . . .$1,323,925.88
Receivable:
the form of discounted bills, manufacturers'
equities in contracts and discounted piano con-
11
t & *# »S5iaK **"* *
You will notice that the contingent or indirect
liability of the company is larger than the direct.
That is due to the policy of the company in dis-
counting a large amount of notes received from
dealers and piano contracts and leases.
We are pursuing a policy of mutual co-operation
with the dealers and banks who hold the paper
that we believe will minimize as much as possible
the loss the estate is likely to sustain on account
of its endorsement or guarantee of its contingent
or indirect liability.
To date we have paid claims and reduced the
amount of the contingent or indirect liability shown
in the statement as follows:
1. Contingent claims amounting to. .$54,261.74
2. Secured claims amounting t o . . . . 10,872.60
3. Preferred claims amounting t o . . 8,572.11
$79,706.45
Making the total direct and indirect liability re-
duced by us to date the sum of $79,706.45.
We have not had the assets appraised by any
official appraisers appointed by the court, as we
did not think it necessary.
With a view of advising the creditors and stock-
holders of what we think the true value of the
assets are, we have gone over them and you will
notice in the statement there are created certain
reserves for shrinkage in the assets which leaves
the net value of the assets as shown to be $563,-
518.04.
In our opinion that represents the true value of
the assets as a going concern, but not their value
for liquidation purposes. We believe that the re-
serve for shrinkage should be even greater if con-
sidered from a liquidation point of view.
The liabilities represent the amount that is
known to the receiver at this time.
We have had a number of inquiries lately ask-
ing about the ownership of the plant, the prior
lien of the preferred stockholders, when and how
claims should be proven, and will all claims be paid
in full.
For the purpose of general answer to these in-
quiries we beg to advise:
(a) The land, buildings and permanent equip-
ment of the plant are the personal property of W.
B. Farrand. who was president of the company,
the title to which has always been in either his or
his father's name, the company never having had
title. We have entered into a lease for the use of
all, or such proportion of the premises as we might
need and for as long as we might need it, for the
operation and final liquidation of the business.
(b) The preferred stockholders have no lien
upon the assets ahead of the creditors. It is simply
a prior lien to the common stock, both of which
come after the retirement of both the direct and
indirect liability.
(c) The petition of the company for voluntary
dissolution will be heard by the Wayne County
Circuit Court in Chancery on November 24, 1913,
and if the company is then dissolved, the court will
soon thereafter enter an order naming ninety days,
during which time all creditors should prove th? : r
claims. When that order has been entered a notice
{Continued on page 12,)
THE MUSIC TRADE REVIEW
RECEIVER'S REPORT OF FARRAND CO. AFFAIRS.
Detroit Trust Co. Issues Complete Statement Regarding t h e Condition of That Concern so F a r
as Can Be Determined at t h e Present Time—Total Liabilities $823,925.88, of Which
Only $313,451.36 Are Direct—Assets $563,513.04—Statement Accepted a t Face Value.
(Special to The Review.)
. DETROIT, MICH., October 13.—The Detroit Trust
Co., receivers for the Farrand Co., has issued a
statement of the condition of the concern as far
as it can be determined at the present time. It
has required nine weeks to compile the figures
given herewith.
In substance the statement shows that there are
total liabilities "as far as known to the receivers,"
of $823,925.88, exclusive of half a million dollars^
of common and preferred stock, and total assets,*
as a going concern, of $563,518.04. What the as-
sets would total in liquidation the receiver does
not attempt to State.
"The assets of a manufacturing plant naturally
are worth considerably more as a going concern
than in liquidation," said J. A. Bower, assistant
^
the company just a few days prior to our appoint-
merit as receiver.
The name "Colby Company" was a trade name
owned by the Farrand Co. and its assets belong to
t h e Farrand Co.'s estate, and for that reason we
consolidated the affairs of both companies in the
statement.
The following is a statement of the assets and
liabilities as found by us and which appeared on
t h e books of the company at the time of our ap-
pointment:
A S S £ T S Q F T H £ F A R R A N D COMPANY, CLOSE OF
BUSINESS AUGUST 6, 1913.
Cash: On hand in office
$246.22
On deposit in bank
_._A 8 ^!!
$ 4 3 4 5f>
Bills Receivable:
£n hand in office .. -Sis.™?-"
'
Discount with banks. .410,131,86
secretary of the Detroit Trust Co., to The Re-
view. Mr. Bower has direct charge of the affairs
of the Farrand Co.
The direct liability, however, is only $313,451.36.
The remainder, $510,474.52, is indirect liability in
'
^
>
J
>
—
Less contingent liability
—$429,141.23
4io,m.86
$ i 9 , 0 09.37
Less reserve for shrinkage
9,500.00
. .,
D
Accounts
Travelers' advances.
Farrand Co. custom-
tracts. Upon the amount of shrinkage in the value
o: these items will depend the total direct liabili-
ties when the affairs of the company are wound
,,
T-,
. . . . . . . .
up. Mr. Bower states explicitly that it is impos-
sible to make an estimate upon how much the as-
Less res., shrinkage. 35,000.00
00,324.03
C o l b y Co. customers'
accounts.
$21,318,09
Res. for s h r i n k a g e . .
5,000.00
i6,3is.O9
"
'"
$2,819.38
„„.
ers accounts
$8c>,324.03*
$69,461.50
« u will realize if the company is liquidated. As "TS?^!^«K2i.
the direct liabilities are about a quarter of a mil-
lion dollars less than the assets, it appears that the
creditors at least ought to be paid in full.
T
A 11
'
11 . u
•
u-
Less mfrs' equities.. 9,917.21
$ioT566~59
Contracts discounted 97,375.39
J
$198,941.98
J. A. bower manages ill the receiverships under-
taken by the Detroit Trust Co., and as he has
...
.
.
.
.
. . _
, „
hitherto met with signal success his rarrand Lo.
statement is accepted by financial men here as a
true reflection of conditions and as a forecast of
what the settlement will be. It was he who
brought the CloUgh & Warren Co. through its dif-
ficulties, and he is now handling half a dozen other
important receiverships. The statement in full
Less as follows:
, Contracts discntd. $97,375.39
Res. on contracts
.
discounted a n d
. company^ 0 ""! 32,11730
.
65,258.09
$133,683.89
Less reserve for shrinkage
13J368.40
pia)w Contracts
from Sale of Consigned Goods:
The Farran.l contrcts$H6,042.56
A
» t s equity$37,610.78
Shrinkage.. 35,365.77
follows •
iunccwi,.
To the Creditors of the Farrand Co.
j.
T
, ,
.
•
.
.
$43,066.01
Immediately upon our appointment as receiver
of the Farrand Co., of this city, we issued a cir-
.
.
,.
, , 1 1 1
,
1
cular letter to its creditors and stockholders dated
August 7, 1913, notifying them of our appointment
as receiver and explaining the reasons given by the
officers and directors of the Farrand Co. for such
Co]by Co
contrcts ..
Shrinkage..
p iann
998.26
6,015.26
.
~T.
$8,948.38 . $ 5 2 O 5 0 s g
Settlement Contracts Accepted from Dealers:
The Farrand Co..... $66,831,84
Less dealers
We took an inventory of all the property of the
company and had the books examined for the pur-
.
.
- i l l -
, , ,
. ,
J
.
..
,
,
1
i-
r
1
i
.
.
. . .
10,067.28
. $25,167.36
•
3,8ii!80
$n,435.3i
Receivable:
C o acc>ts
$80233 . 55
The Colby Co. ac'ts 41,654.81
$121,888.36
L e s s re serve for shrinkage.... 40,629.45
$8i,258.oi
London, England, Branch:.
Cash, accounts and piano contracts
Factory Inventory .-
Plant Equipment—
11
Machinery,
$22,642.13
pulleys
ar ,d
belting
$32,990.62
Shafting,cou P lings &
5e8B1
Tools and fixtures..' 24,234.57
T'fn^^qu^pment 1 ' 8 . 11 ." 1,397.26
Automobile, horse,
office
and shop
f urn & fixtures
a
"d misc. equip.. .^24^024.67
Materials & supplies:
3 g l g 93
Supplies in stock... $31,417.94
Lumber
20,893.54
,
At the time of our appointment there were a
number of .orders still unfilled that had been placed
by the company for material and supplies which
were "special" in so far as they would not be of
F
.
Farrand
• r i ] P
,
'
Less reserve for shrinkage
.
.
It was the general policy of the company to sell
the largest proportion of its product upon consign-
ment or long terms. It is our intention, however,
to discontinue that policy, although in some in-
stances it may be necessary to continue as in the
,
.
.
.
. .
.
past in order to support the business of the agent
in order to liquidate his obligations with the
smallest loss, but in most instances this will not be
'
$40,414.47
$35 23464
held by disc. co...
Consigned Accounts
ceiver should be with reference to continuing the
operation of the plant.
.
.
.
.
,
f
T
It is our intention to continue the operation o*
the plant indefinitely, as the company has a large
..
,
.
,
stock of material and supplies on hand and sev-
eral hundred pianos, player-pianos and organs in
the course of construction.
26,417.37
—
g ^ f h ^ ^ S
• discounted a n d
pose of acquainting ourselves with the business and
the property in order that we might know the
value of the assets and arrive at some decision at
an early date as to what the policy of the re-
,
equity.
•
.
$14,999.64
Agts equity $5,017.00
appointment.
/
72,976.55
•
Veneer
io,956.7i
156 54
- $63
Music
494 43
' '
Musical instruments in
prog, of manfr:—
J
Pianos and players. .$129,696.49
use to any other manufacturer, and by pursumg
Organs
our operating policy most all the orders for sup-
plies and materials will be filled and the goods ac-
,
, .
.
, . ,
,
.
. j
Less reserve
cepted by us so that this large and undetermined •
liability will be eliminated and will accrue to the
"
'
.
.
.
.
The branch at London, England, is being liqui-
dated, as arrangements for its sale were made by
3,800.59
$133,770.08
$280,410.44
for shrinkage
84,000.00
. 196,410.44
7
!pi)Pt>,olo.v4
*There are on hand notes and niano contracts received
from dealers and placed with the Farrand Company as ad-
^eS^^t*"
e
LIABILITIES OF THE FARRAND CO. AT CLOSE OF
BUSINESS AUGUST 6, 1913.
,
I'nsccurcd Direct Obligations:
l'.ank loans
54,600.00
Hills payable to mdse. creditors 04,118.16
Accounts payable
53,354.49
Customers' credit balances . . . .
5,092.85
Accrued payroll and salary acc't
7,285.86
$258,851.36
Secured Direct
Bank loans
Obligations:
54,600.00
$313,451.36
(There are only two secured creditors and they
have $66,858 79 par value of piano con-
tracts and a chattel mortgage on 250 in-
struments at the plant.)
Indirect Liability, Shown in Statement of
Assets, as Follows:
Bills receivable dis-
counted with banks$410,131.86
Mfrs. e q u i ties in
contracts
9,917.21
Piano contracts direct
(disc, less res.) . . 65,258.09
Piano settlement con-
tracts (discounted
less reserves) . . . 25,167.36
$510,474.52
Total direct and indirect liability
Capital Stock:
Preferred stock issued
$200,000.00
Common stock issued
300,000.00
•
$823,925.88
500,000.00
Total obligations known to receiver. . . . . .$1,323,925.88
Receivable:
the form of discounted bills, manufacturers'
equities in contracts and discounted piano con-
11
t & *# »S5iaK **"* *
You will notice that the contingent or indirect
liability of the company is larger than the direct.
That is due to the policy of the company in dis-
counting a large amount of notes received from
dealers and piano contracts and leases.
We are pursuing a policy of mutual co-operation
with the dealers and banks who hold the paper
that we believe will minimize as much as possible
the loss the estate is likely to sustain on account
of its endorsement or guarantee of its contingent
or indirect liability.
To date we have paid claims and reduced the
amount of the contingent or indirect liability shown
in the statement as follows:
1. Contingent claims amounting to. .$54,261.74
2. Secured claims amounting t o . . . . 10,872.60
3. Preferred claims amounting t o . . 8,572.11
$79,706.45
Making the total direct and indirect liability re-
duced by us to date the sum of $79,706.45.
We have not had the assets appraised by any
official appraisers appointed by the court, as we
did not think it necessary.
With a view of advising the creditors and stock-
holders of what we think the true value of the
assets are, we have gone over them and you will
notice in the statement there are created certain
reserves for shrinkage in the assets which leaves
the net value of the assets as shown to be $563,-
518.04.
In our opinion that represents the true value of
the assets as a going concern, but not their value
for liquidation purposes. We believe that the re-
serve for shrinkage should be even greater if con-
sidered from a liquidation point of view.
The liabilities represent the amount that is
known to the receiver at this time.
We have had a number of inquiries lately ask-
ing about the ownership of the plant, the prior
lien of the preferred stockholders, when and how
claims should be proven, and will all claims be paid
in full.
For the purpose of general answer to these in-
quiries we beg to advise:
(a) The land, buildings and permanent equip-
ment of the plant are the personal property of W.
B. Farrand. who was president of the company,
the title to which has always been in either his or
his father's name, the company never having had
title. We have entered into a lease for the use of
all, or such proportion of the premises as we might
need and for as long as we might need it, for the
operation and final liquidation of the business.
(b) The preferred stockholders have no lien
upon the assets ahead of the creditors. It is simply
a prior lien to the common stock, both of which
come after the retirement of both the direct and
indirect liability.
(c) The petition of the company for voluntary
dissolution will be heard by the Wayne County
Circuit Court in Chancery on November 24, 1913,
and if the company is then dissolved, the court will
soon thereafter enter an order naming ninety days,
during which time all creditors should prove th? : r
claims. When that order has been entered a notice
{Continued on page 12,)
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