Divitkos, in the matter of ExDVD Pty Ltd (in liquidation)

ExDVD Pty Ltd, formerly known as EzyDVD Pty Ltd, was a company engaged in the retail of digital video disks (DVDs). The Commonwealth Bank of Australia (CBA) held a charge over the company’s assets and appointed receivers who took control of the company’s business and assets. Subsequently, ExDVD was placed in liquidation. CBA claims that the receivers made payments to employees of the company, and that CBA is entitled to priority in the liquidation to the extent of those payments. CBA contends that it is subrogated to the rights of the employees to whom the receivers made payments, and that it is entitled to be paid $945,557.44 in priority to the unsecured creditors.

The principal legal issues in this case are whether CBA can claim priority in the liquidation of ExDVD to the extent of the payments made by the receivers, and whether the liquidator should require proof of the employees' claims before accepting CBA’s claim. The court must determine if CBA is subrogated to the rights of the employees to whom the receivers made payments, and if so, what evidence is required to support CBA’s claim.

The court found that CBA can be regarded as subrogated to the rights of the employee creditors to whom the receivers made payments. This means that CBA is entitled to the same priority in the liquidation as the employees would have been entitled to. The court held that it is a matter for the liquidator to determine the sufficiency of the evidence provided by CBA in support of its claim, in accordance with the Corporations Regulations.

The court determined that the liquidator may regard CBA as subrogated to the rights of the employee priority creditors to whom the receivers made payments, and that it is a matter for the plaintiff to determine, in accordance with the Corporations Regulations, the sufficiency of the evidence provided by CBA in support of its claim.