Francis (Trustee), in the matter of Fotios (Bankrupt) v Helios Corporation Pty Ltd

The Federal Court has been asked to provide advice to Receivers appointed to a trust, the Michael Fotios Family Trust, which has been drawn into the bankruptcy of Fotios and the voluntary administration of Helios Corporation Pty Ltd. The Receivers were appointed by the Court to investigate and deal with the assets and liabilities of the Trust, which is likely to have a net deficiency. The original trustee of the Trust, Mr Fotios, has become bankrupt, and the replacement trustee, Helios, has entered voluntary administration. Creditors of Mr Fotios’s bankrupt estate are seeking exoneration and recoupment from the Trust assets by way of subrogation. The Receivers have applied for judicial advice concerning the priority of entitlements to the Trust assets. The court considered whether it has the power to give such advice and if so, what advice should be given. The court found that it has inherent jurisdiction to provide judicial advice to the Receivers it has appointed and that the directions sought by way of advice concern matters that are within the scope of the appointment of the Receivers.

The court further considered the unpaid present entitlements of beneficiaries of the Trust and whether they can be enforced. The court found that the beneficiaries’ entitlements are enforceable and that the statutory priority regime in the Personal Property Securities Act 2009 (Cth) applies to the realisation of property secured by guarantee. The court also considered the effect on priorities of the realisation of property secured by guarantee. The court found that the Receivers’ entitlement to remuneration should be increased to $550,000 and that the orders for their appointment should be varied to increase the maximum amount to which the Trustees in Bankruptcy may be entitled on the basis of assistance provided to the Receivers in the care, preservation, and realisation of the property of the Trust to $125,000. The court ordered that the parties provide a minute of proposed orders to give effect to these reasons and that the application for judicial advice by the Receivers be listed for further hearing on a date to be fixed.