Illegal phoenix activity: Proposed reforms to affect directors and facilitators

  • The proposed legislation is aimed at deterring and disrupting illegal phoenixing and punishing those involved in this behaviour more harshly.
  • The reforms to corporation and tax laws will have a significant impact on directors, pre-insolvency advisers and businesses who facilitate illegal phoenix activity.
  • The reforms are not intended to hinder legitimate commercial transactions, including restructuring.

Ashes in the shape of phoenix

In August 2018, ASIC disqualified Jason Hammond from managing companies for the maximum period of five years. The reason? Mr Hammond’s actions regarding three failed companies.

Among numerous other things, ASIC found that Mr Hammond had engaged in illegal phoenix activity by transferring the business of an indebted company to a new company, leaving the initial company with no assets to pay creditors while continuing what was essentially the same business using the new company.

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