Say "No" to illegal phoenix activity!
OTP readers would be familiar with the concept of "phoenix
activity", which typically involves the failure of one company
(Oldco) and a second company (Newco) being set up by the same owner
and conduct essentially the same business, leaving debts in Oldco
unpaid. The key distinction between legal and illegal phoenix
activity is that:
- Legal phoenix broadly refers to the owner starting a new
company to genuinely rescue the failed business.
- Illegal phoenix activity happens when a new company is created
to continue the business of a company that has been deliberately
liquidated to avoid paying its debts.
Illegal phoenix activity is not a legally defined term and is
almost impossible to define because illegal phoenix activity can
take many forms and how it is being conducted is constantly
changing. Further to that, it is practically difficult to draw a
distinction between illegal phoenix activity and a legitimate
business
