However, if this arises and there are surplus assets, the Liquidator cannot just distribute the surplus amongst those entitled to it. It is mandatory for the Liquidator to make an application to the Supreme Court seeking “special leave” under section 488(2) of the Corporations Act 2001 (Cth) (Corporations Act) in order to pay the surplus to those parties who are entitled to receive it. There are specific requirements for an application for distribution of a surplus and a decision earlier this year by Associate Justice Gobbo in the Supreme Court of Victoria, Re Cameron Lane Pty Ltd (In Liquidation) [2024] VSC has addressed the nature of these applications and the issues which must be addressed by the Liquidator.

The Supreme Court’s judgment demonstrates that the following are relevant considerations to be addressed in these applications:

1. The requirement for “special leave” means that the application must be made to Court who will determine whether the requirements for distribution of the surplus have been satisfied. The application will ensure that there is actually a surplus for distribution and that all matters between the contributories and those entitled to the surplus have been taken into account.
2. The application must be supported by an Affidavit which sets out all of the tasks undertaken by the Liquidator, details of the assets which have been realised and recoveries made in the liquidation, details of the amounts paid to creditors to satisfy their debts in full, the contributories and who is entitled to the surplus, the remuneration of the Liquidator and costs of the application to be paid from the assets, the remaining assets (after payment of the remuneration and costs) and amount sought to be distributed to shareholders.
3. The Court may dispense with the requirements in r 7.10 of the Supreme Court (Corporations) Rules 2000 (Vic) (the Rules) where it may be appropriate to do so. Under regulation 5.6.71 of the Corporations Regulations 2001 (Cth) (Corporations Regulations), the Liquidator is required to annex a schedule, pursuant to Form 551 of the Corporations Regulations, to indicate the persons who may be entitled to a surplus and a notice must be sent to those persons – this schedule will provide details of the contributories and those persons who may be entitled to receive part of the surplus in proportion to their entitlements and the notice will ensure that they have an opportunity to participate in the application and, where necessary, they consent to the application. However, in a relatively simple case where there may only be one contributory (or beneficiary), the Court may consider it just for those requirements to be dispensed with by the Court.
4. As part of the application, the Liquidator may seek orders under section 480(d) of the Corporations Act for a release as Liquidator within a period of 60 days which will enable all tasks to be undertaken concerning the distribution of the surplus and thereafter, that ASIC may deregister the company. Whilst there is no requirement for the Court to make this Order, it is sometimes included as part of the application under section 488(2) of the Corporations Act.

There are numerous cases which have addressed these applications for distribution of a surplus¹ but Liquidators must ensure that all of the relevant requirements have been satisfied in order to demonstrate to the Court that it should grant “special leave” to distribute the surplus and, if necessary, whether some of the usual requirements under the Rules and the Corporations Regulations are also required to be satisfied or can be dispensed with by the Court as required.

Catherine Pulverman of FCW Lawyers has considerable experience in this area and she has made numerous applications on behalf of Liquidators seeking special leave to distribute a surplus in a liquidation including appearing herself on the return of each of the applications. If you require advice in relation to these applications, Catherine and her team would be happy to provide assistance.