Update: Re CMI Industrial Pty Ltd (In Liq); Byrnes & Ors v CMI Limited [2015] QSC 96

Receivers do not have to distribute profits from the sale of inventory acquired by them during their appointment to priority creditors.

The question of whether priority creditors have a statutory entitlement to receivers’ inventory trading profit has largely been left unanswered until the decision handed down by Justice Mullins on 27 April 2015. 

According to the decision, priority creditors pursuant to section 433 of theCorporations Act 2001 (Cth) do not have a statutory entitlement to inventory trading profit realised after the appointment of a receiver, as the inventory profit was not an asset identifiable at the date of the appointment of the receivers.

This decision provides a much-needed clarification to receivers who generate inventory trading profit after the commencement of their appointment on how to distribute those funds.

Click here to access the case.