The Productivity Commission, Corporate Insolvency and Phoenix Companies

Abstract

In May 2015 the Productivity Commission released its Draft Report ‘Business Set-up, Transfer and Closure’. This research note does not deal with the broad range of issues touched on by the Productivity Commission. Instead, it concentrates on those matters relating to corporate insolvency and the recommendations relevant to dealing with phoenix companies. The first of these is an encouragement to earlier entry into voluntary administration. The second is the voiding of ipso facto clauses. The third is designed to reduce the time and expense involved in liquidations with few or no assets. The authors also discuss the adoption by the Productivity Commission of their recommendation relating to director identification numbers. This reform is aimed at eliminating the problem of fictitious identities being used for company directorships when new companies are registered and will also assist the Australian Securities and Investments Commission in detection of other wrongdoing.

Keywords: Corporate insolvency, phoenix companies, company incorporation