How many times have you been owed money by a corporate customer
which closes its doors one day only to 'rise' up the next
as a new but similar entity, running what appears to be the same
business? It begs the question, 'is this illegal phoenix
activity'?
What is illegal phoenix activity?
While not a defined term, the characteristics of illegal phoenix
activity is the deliberate stripping and transferring of assets
from a financially distressed or insolvent company to another
entity to evade repaying liabilities to creditors. Those creditors
often encompass suppliers, employees and the
Australian Taxation Office (ATO).
A
2018 report commissioned by the Phoenix Taskforce estimated the
cost of illegal phoenix activity to the economy to be around
$2.85-$5.13 billion annually.
