Last month, ASIC disqualified Jason Hammond from managing
companies for the maximum period of five years. The reason? Mr
Hammond's actions regarding three failed companies.
Among numerous other things, ASIC found that Mr Hammond had
engaged in illegal phoenix activity by transferring the business of
an indebted company to a new company, leaving the initial company
with no assets to pay creditors while continuing what was
essentially the same business using the new company.
Illegal phoenix activity is estimated to cost the country
between around $3 billion and $5 billion annually.1
The five year ban is a salutary caution. For many years, the
government has struggled to deal with illegal phoenix activity.
This ASIC decision, and proposed reforms discussed below, signal a
renewed effort by the regulator and legislature; those who engage
in such behaviour can expect to be dealt with harshly.
