American Express Marketing & Development Corp

In the matter of *American Express Marketing & Development Corp* [1999] FCA 100, the Federal Court of Australia considered an application by the liquidator of American Express Marketing & Development Corp (in liquidation) for directions regarding the distribution of surplus assets. The dispute arose from competing claims for these surplus assets by various creditors of the company.

The primary legal issue before the Court was the proper order of priority for the distribution of surplus assets among creditors, particularly concerning the claims of preferential creditors and ordinary unsecured creditors. The Court was required to determine whether certain secured creditors, who had also lodged claims as unsecured creditors, were entitled to participate in the distribution of surplus assets after their secured debts had been satisfied.

Justice McDonagh applied the principles established in *National Mutual Life Association of Australasia Ltd v Public Trustee* [1993] HCA 30 and *Re Universal Distributing Co Ltd* (1933) 49 CLR 1, which confirm that surplus assets remaining after the payment of all debts, including secured and preferential claims, are to be distributed amongst the ordinary unsecured creditors of the company. His Honour reasoned that secured creditors, having had their security realised and applied to their debts, were not entitled to a further share of the surplus as unsecured creditors unless their claims as unsecured creditors were distinct from their secured claims. The Court clarified that a creditor cannot claim both as a secured creditor and an unsecured creditor in respect of the same debt.

The Court ultimately directed that the surplus assets were to be distributed amongst the ordinary unsecured creditors of American Express Marketing & Development Corp (in liquidation) in accordance with their proven unsecured claims.