Home > Publications > Tension between the application of principles of trust law and insolvency law has been resolved by the High Court (for now)

Tension between the application of principles of trust law and insolvency law has been resolved by the High Court (for now)

There have been conflicting authorities as to how creditors of insolvent trustees the subject of external appointment (under the Bankruptcy or Corporations legislation) should be treated:  does the law of trusts apply or are their claims subject to the operation of legislation governing insolvency. The payment of those creditors rests on the right of indemnity of the insolvent trustee. In Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth [2019] HCA 20, the High Court has clearly stated that while the nature of property that falls under the control of an external insolvency administrator does not change upon such appointment, the results of the exercise of that administrator’s right of indemnity are affected by the relevant statutory priority regime.

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