Does property held by a bankrupt on trust vest in the bankrupt's trustee in bankrupcty?

Circumstances where a bankrupt holds property on trust may create a number of complexities for the bankrupt’s trustee in bankruptcy. In some instances, where a bankrupt trustee has a beneficial interest in the trust property (such as a claim to an indemnity for expenditure incurred by the trustee in the performance of the trust) the trust property vests in the bankrupt’s trustee in bankruptcy. However, if the bankrupt trustee does not have any beneficial interest in the trust property, the trust property will not vest in the bankrupt’s trustee in bankruptcy. This article examines a recent decision of the High Court which sheds lights on some of the issues involved in the complicated interaction of a number of provisions of the Bankruptcy Act 1966 (Cth) and has implications for trustees in bankruptcy, their advisors and caveators more generally