The Treasury Laws Amendment (Combating Illegal Phoenixing)
Act 2019 (Cth) (Act) came into operation on
18 February 2020. The purpose of the Act is to give regulators
greater powers to 'detect and disrupt phoenix activity, and
to prosecute directors and other professional advisors who engage
in or facilitate the activity'.1
Illegal phoenixing involves the stripping and transferring of an
entity's assets, thereby denying creditors' access to those
assets to meet unpaid debts. Creditors, including employees, are
often left out of pocket due to illegal phoenixing and these
amendments are designed to crack down on directors who actively
seek to avoid paying creditors and employees and dodgy
pre-insolvency advisors who recommend and facilitate illegal
phoenixing.
