ASIC has revealed details of its surveillance program to combat illegal phoenix activities. ASIC said phoenix activity is the fraudulent act of transferring the assets of an indebted company into a new company to avoid paying creditors, tax or employee entitlements. The new company, usually operated by the same director, continues the business under a new structure to avoid their responsibilities to their creditors. ASIC said its actions include removing directors who have been involved in 2 or more failed companies from the industry.
ASIC Commissioner Greg Tanzer said ASIC is “looking at failed companies, mostly within the small business sector, from July 2011 onwards where there have been allegations of illegal phoenixing”. Mr Tanzer said ASIC has so far identified a target group of 1,400 companies. He said ASIC is now paying special attention to approximately 2,500 individuals who were directors at the time these companies failed or ceased being directors shortly before the companies were wound up.
Source: ASIC media release 13-253MR, 9 September 2013
[LTN 9/9/13]