17/06/2026
A recent NSW Supreme Court decision highlights an important limitation on insolvency set-off where a company trades solely as trustee.
In Segal v Sharma (No 3), the Court held that s 553C of the Corporations Act did not apply because the debts owed to the corporate trustee were held for the benefit of unitholders, while the debts owed by the trustee were personal liabilities of the company.
The result: no mutuality, and no statutory set-off.
For liquidators, trust creditors and advisers, the decision reinforces the importance of identifying who holds the beneficial interest in a debt and when any relevant rights crystallise.
Get in touch with our partner, Blake Shaw to discuss trust insolvency, set-off disputes and creditor recovery strategy.
Read the full case note here: https://ironbridgelegal.com.au/no-set-off-insolvent-trustee/