Breaking news: the Federal Court has just now held that the Killarnee decision is to be applied in circumstances where a Deed Administrator is seeking to disperse pooled trust assets to a stepped hierarchy of stakeholders.
Manpak Holdings is the case name.
This means that a Voluntary Administrator appointed to a trustee company that is subject to a Deed of Company Arrangement (“DOCA”) has the power to:
1. realise the trusts assets (only after seeking approval from the Court first);
2. disperse the funds from those realised assets;
3. pay themselves in priority to all; and
4. pay priority creditors in the order prescribed by s556 of the Corporations Act.
The Court found that there was no “appreciable difference” between the DOCA appointment and the Liquidation, so Killarnee must be followed.
Importantly, the Court said that if the company traded in its own capacity, as well as a trustee, any company assets can only be paid to company creditors. Vice versa for trust assets.