‘Phoenix’ re­forms wel­comed

Weekend Gold Coast Bulletin - - BUSINESS -

RE­FORMS de­signed to crack down on il­le­gal phoenix­ing ac­tiv­i­ties have been wel­comed by lo­cal ac­coun­tants.

The term il­le­gal phoenix­ing refers to com­pany di­rec­tors who sim­ply re­birth a com­pany, hence the phoenix la­bel, and leave be­hind debts, in most cases un­re­cov­er­able, while set­ting up a new com­pany pro­vid­ing sim­i­lar prod­ucts and ser­vices as the old one.

Re­cently Hall Chad­wick Gold Coast partner Richard Croaker and na­tional pro­fes­sional stan­dards man­ager Steven Bar­nett de­liv­ered a work­shop on the Gold Coast to lawyers and ac­coun­tants on new pro­posed laws de­signed to com­bat il­le­gal phoenix­ing.

Mr Bar­nett said it was ironic that il­le­gal phoenix­ing is yet to be de­fined in leg­is­la­tion – at this stage it is known as a Cred­i­tor De­feat­ing Dis­po­si­tion.

“Phoenix­ing may not tech­ni­cally be il­le­gal on its own be­cause on the sur­face it can look re­mark­ably sim­i­lar to a gen­uine busi­ness res­cue – we cer­tainly don’t want laws that could be a de­ter­rent to a gen­uine busi­ness res­cue,” he said.

“Those ac­tiv­i­ties in­volved in as­sist­ing to save a fail­ing busi­ness may in­clude ceas­ing to trade to avoid per­sonal li­a­bil­ity for in­sol­vent trad­ing, set­ting up a new com­pany and sell­ing off as­sets at a fair mar­ket value – all per­fectly le­gal pro­vided those in­volved act re­spon­si­bly.”

Re­lated re­forms also be­ing con­sid­ered in­clude the in­tro­duc­tion of di­rec­tor iden­ti­fi­ca­tion num­bers (DIN).

This is where reg­u­la­tors, credit providers and in­sol­vency prac­ti­tion­ers will be more eas­ily able to iden­tify and track in­di­vid­u­als and red flag higher-risk en­ti­ties.

The build­ing in­dus­try has been the tar­get of il­le­gal phoenix­ing ac­tiv­ity on the Gold Coast.

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