On 18 February 2020, significant changes to the Corporations
Act 2001 (Cth) came into effect to help combat the
controversial and damaging practice of illegal phoenix
activity.
The changes create new civil and criminal offences for the
transfer of assets which are "creditor-defeating
dispositions", and also give ASIC, the ATO and liquidators
additional powers in a bid to increase successful enforcement of
these new laws.
In what is a further step in isolating and curtailing illegal
phoenix activity (which needs to be carefully distinguished from
legitimate corporate restructuring), it is hoped that these laws
together with ASIC's new aggressive "why not
litigate" enforcement culture will result in a crackdown on
this economically harmful practice. Without a willingness by
liquidators and ASIC to take on those responsible however, these
new laws will do nothing to combat the problem, leaving creditors
and employees continually and unfairly out of pocket.
