Shareholder Distribution in a Court Liquidation
Our Melbourne office has recently dealt with a unique matter on the Court Liquidation of Dentucorp Pty Ltd (In Liquidation).
The only substantial asset of the Company was a property in Geelong (Property). After many issues in dealing with the Property, it was realised at auction on around April 2016. The proceeds from the sale of the Property were sufficient to pay out the mortgagee (NAB), Rodgers Reidy fees and costs, all creditor claims plus statutory interest of 8% and resulted in a surplus of $13.5k available to the Company’s Shareholders.
Section 488 of the Corporations Act 2001 (the Act) delegates to a liquidator (as an officer of the Court and subject to the control of the Court) certain powers of the Court being:-
(1) Provision may be made by rules or regulations for enabling or requiring all or any of the powers and duties conferred and imposed on the Court by this Part or Schedule 2 in respect of:
(a) the holding and conducting of meetings to ascertain the wishes of creditors and contributories;
(b) the paying, delivery, conveyance, surrender or transfer of money, property or books to the liquidator;
(c) the adjusting of the rights of contributories among themselves and the distribution of any surplus among the persons entitled to it; and
(d) the fixing of a time within which debts and claims must be proved.
(2) Despite anything in rules or regulations made for the purposes of subsection (1), a liquidator may distribute a surplus only with the Court's special leave.
Special Leave Application
Accordingly, on 2 May 2017 an affidavit was filed in support of an application to the Court for Special Leave to distribute the Company’s surplus funds to its Shareholders.
A notice regarding the application was also published in The Age (Melbourne) in accordance with Rule 7.9 of the Supreme Court (Corporations) Rules 2013.
On 26 May 2017, the matter was heard by Associate Justice Gardiner who noted that an application for Special Leave had not been made in at least 30 years.
His Honour made Orders granting Special Leave for the surplus funds to be distributed to the Company’s Shareholders.
For a copy of the affidavit, click here.