Insolvency Alert: Bare trustee's right to indemnity

By Darrell Jardine, Partner and Jason Down, Associate

In an important decision, the Full Court of the Federal Court has clarified a bare trustee's right to indemnity out of the property of a trust.

Here, Partner Darrell Jardine and Associate Jason Down discuss this important decision and what Liquidators need to be aware of.

Key points you need to know

• In liquidations of corporate trustees, liquidators need to carefully examine the terms of the trust deed to determine whether the role of the trustee is terminated on liquidation.
• Liquidators must be alive to the limited nature of the role of a bare trustee.
• Liquidators of bare trustee companies are entitled to be indemnified out of the property of the trust for the costs and expenses of litigation commenced to protect trust property.