Trading trusts and the statutory priority regime, following Court of Appeal decision in Amerind
The use of trust structures to operate businesses is commonplace in Australia. However, this has given rise to a complex question of what happens to trust assets when a corporate trustee has a liquidator or receiver appointed to its affairs. Do long standing trust principles apply in the winding up and application of trust assets? Or does the statutory scheme of priority under the Corporations Act 2001 apply? This question has been decided differently across the various State and Federal jurisdictions, and this has led to uncertainty for creditors and insolvency practitioners alike. Recently, two important decisions have gone a long way towards settling the law on this issue. In Commonwealth of Australia v Byrnes and Hewitt as receivers and managers of Amerind Pty Ltd (receivers and managers appointed) (in liq), the Victorian Court of Appeal determined unanimously that the statutory regime under the Corporations Act does apply when winding up insolvent trading trusts. Likewise, in Killarnee Civil & Concrete Contractors Pty Ltd (in liq), the Full Court of the Federal Court also applied the statutory regime to the winding up of a corporate trustee. This presentation will deal with these important cases, and consider whether the issue is now finally resolved.