In an important decision for insolvency practitioners, the Victorian Court of Appeal today delivered judgment in Commonwealth of Australia v Byrnes and Hewitt in their capacity as joint and several receivers and managers of Amerind Pty Ltd (Receivers and Managers Appointed) (in liq) & Ors [2018] VSCA 41.
The appeal concerned the question of whether trust assets held by an insolvent corporate trustee should be distributed in accordance with the priority regime in the Corporations Act.
The Court of Appeal (unlike the trial judge) found that Amerind’s right of indemnity was property of the company and therefore the priority regime applied. As a result, the Court held that the Commonwealth (in place of the employees, following its advance under the Fair Entitlements Guarantee Scheme) was entitled to be paid before other creditors from particular assets.
This decision will clarify an area where there have been conflicting authorities across jurisdictions.
If you would like to discuss the decision handed down today please contact Peter Leech.