We recently released an e-alert on the law reforms on
directors' derivative liability. Although not directly part of
the derivative liability reforms, the close of 2011 and the first
half of 2012 has seen a variety of exposure drafts, submissions,
and parliamentary jostling over another key area of directors'
liability – the Federal Government's law reforms to
counter phoenix activities.
Essentially, phoenixing is where a failing company with
substantial debts goes into liquidation, and a company with a very
similar name to the liquidated company then commences trading. The
new company usually provides similar, if not the same, goods or
services, and their directors are often the same as or related to
the directors of the failed company, but without the baggage of the
liability to the creditors of the failed company. The following
proposed laws attempt to make directors personally liable for the
debts of the new (similar) company, and also give ASIC the power to
wind
