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ARTICLE · 21 JULY 2004

Clipping the Phoenix´s Wings

Clayton Utz
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The Australian Tax Office (ATO) is using an innovative legal weapon against "phoenix" companies. By winding a pheonix company up while still solvent, this tactic may help to prevent the transfer of assets out of the company.

AustraliaCorporate/Commercial Law
Karen O'Flynn
Karen O'Flynn
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The Australian Tax Office (ATO) is using an innovative legal weapon against "phoenix" companies. By winding a pheonix company up while still solvent, this tactic may help to prevent the transfer of assets out of the company.

The provisions being used by the ATO are common in many jurisdictions which derive their company law statute from the original English model.

Just and equitable

The Guss family conducted their furniture business through a series of companies. There was a history of running up tax debts in one company and, before the company could pay those debts, transferring the business to another company (and so on).

In 2001, the latest company in the chain (Casualife Furniture International) had run up tax debts. This time, the ATO decided to get in first. It applied to have Casualife wound up while it was still a going concern.

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