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ARTICLE · 04 MARCH 2020

Risky business: directors on notice once more

Bennett & Philp Lawyers
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New laws aim to combat & deter illegal phoenix activity & reduce the harmful effects of phoenixing on the Australian economy.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Chris Lillie
Chris Lillie
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In brief

The Treasury Law Amendment (Combating Illegal Phoenixing) Bill 2019 has been passed by the Senate. These amendments aim to combat and deter illegal phoenix activity and reduce the harmful effects of phoenixing on the Australian economy. The term 'phoenixing' refers to winding up a company to avoid paying its creditors while disposing of valuable assets to a new company which can continue the business.

What you need to know

The amendments introduce new offences in the Corporations Act 2001 that target those who conduct and facilitate illegal phoenix transactions:

  • a new class of voidable transaction makes it an offence for company directors to engage in creditor-defeating transfers of company assets that prevent, hinder or significantly delay creditors' access to those assets.

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