What is the Bankruptcy Surplus Account?

The Bankruptcy Surplus Account holds funds that have not been distributed in bankruptcy estates administered by the Official Assignee. The funds may be undistributed because dividend cheques are returned or not banked. The undistributed funds are held by the Public Trust.

The Bankruptcy Surplus Account is established under the Insolvency Act 2006 (“the Act”). Section 286 of the Act states that; 

“Undistributed money held in the bankruptcy surplus account may be used as follows:

(a) for distribution, in relation to the bankruptcy from which the undistributed money came, to any person who remains to be paid as set out in section 282(c); and

(b) for the purposes of this Act, to the extent and in the manner allowed by this Act; and

(c) subject to section 287, to replace, to the extent of the deficiency, any money misappropriated by an Assignee or any person employed under the provisions of this Act (other than under sections 325 to 360); and

(d) subject to section 288, to meet the costs of court proceedings, obtaining legal advice, or employing an accountant or other experts in circumstances where the creditors of a bankrupt are unable to pay those costs, or it would be unfair or inequitable that they should do so.” 

Payments out of the Bankruptcy Surplus Account can only be made with the approval of the Official Assignee and subject to any conditions he or she may impose.

A payment from the Bankruptcy Surplus Account cannot be made unless the creditors cannot fund the costs in question or the Official Assignee is satisfied that it is unfair or inequitable for the creditors to meet that cost.

When funding is allocated from the Bankruptcy Surplus Account a condition is imposed by the Official Assignee for New Zealand that any funds advanced from the Bankruptcy Surplus Account will be repaid as an expense of the bankruptcy if funds become available to enable repayment.

Funds may also be released if an application is made to cover public interest functions of the Official Assignee including conducting public examinations; taking business prohibition applications; and in opposing or otherwise dealing with applications for early or late discharges from bankruptcy.

Where funds are allocated for public interest applications, this will not lead to repayment of the Bankruptcy Surplus Account.

Applications for funding should be addressed to:

Official Assignee for New Zealand
Ministry of Economic Development
PO Box 1473
Wellington

An application should address the criteria set out in section 286(d) and should attach a copy of any preliminary legal opinions obtained.