This article provides an update on the progress of the
Commonwealth Government's anti-phoenixing legislation, which
has been reintroduced to Parliament after lapsing earlier this year
due to the Federal election.
Earlier this year, with some fanfare, the Federal Government
introduced the Treasury Laws Amendment (Combatting Illegal
Phoenixing) Bill 2019 (the Bill). It was aimed at preventing
the practice of "phoenixing", ie
deliberately using the liquidation process to avoid paying company
debts. Illegal phoenixing is estimated to cost the economy billions
of dollars per year.
The Bill creates a device called a Creditor Defeating
Disposition (CDD), which is a sale or disposal of
company property for less than market price, which stops or delays
the property becoming available for creditors in the winding up of
a company.
