In Re CMI Industrial Pty Ltd (in liq); Byrne & Ors v CMI Limited [2015] QSC 96, liquidators sought directions as to whether they were required to pay trading profits made by the receivers to priority creditors under s433 of the Corporations Act.

Shortly before the liquidators’ appointment, receivers were appointed to the company under a fixed and floating charge. The receivers sold inventory on hand at the time of their appointment and the proceeds were paid to priority creditors.  In order to try to sell the business, the receivers continued to operate various businesses of the company, purchased additional inventory for manufacture and processing and generated trading profits as a result.

The respondent also held a charge over the company, although it was not the appointor of the receivers. The respondent claimed that the trading profits made by the receivers should be paid to it in accordance with its charge.

The liquidators contended that the receiver’s trading profits should be paid to priority creditors under s433.

In relation to circulating security interests (including floating charge assets), section 433(3) provides that the receiver:

“…must pay, out of the property coming into his, her or its hands, the following debts in priority to any claim for principal or interest in respect of the debentures…”

The liquidators considered that the receivers’ obligation to pay priority creditors under s433 was ongoing and applied to all property “coming into” the receivers’ hands, including property acquired after the date of the receivers’ appointment.


In rejecting the liquidators’ arguments, the Supreme Court of Queensland held that:

  • The scheme of priority under s433 revolves around the date of the receiver’s appointment and operates in respect of assets that are identified as being subject to a circulating security interest (formerly the ‘floating’ part of a fixed and floating charge) as at that date.The property “coming into” the hands of the receiver is the property which is identified as being secured by the circulating security interest at the date of the receiver’s appointment.
  • Accordingly, s433 does not confer any statutory entitlement on priority creditors in respect of trading profits made by receivers conducting the business of the company after the date of their appointment as that profit was not an asset identifiable at the date of the appointment of the receivers.


This decision confirms that priority creditors do not have a statutory entitlement under s433 to the receiver’s trading profit and reaffirms the importance of ascertaining which assets are subject to a circulating security interest as at the date of the receiver’s appointment.