Phoenix Activity: Recommendations on Detection, Disruption and Enforcement

162 Pages Posted: 28 Feb 2017 Last revised: 14 Feb 2018

See all articles by Helen L. Anderson

Helen L. Anderson

Melbourne Law School

Ian Ramsay

Melbourne Law School - University of Melbourne

Michelle Anne Welsh

Monash Business School

Jasper Hedges

Australian National University, Research School of Social Sciences

Date Written: February 27, 2017

Abstract

Phoenix activity occurs where the business of a failed company is transferred to a second (typically newly incorporated) company and the second company’s controllers are the same as the first company’s controllers. Phoenix activity can be legal as well as illegal. Phoenix activity is illegal where the controllers’ intention is to shift assets from the predecessor company to the successor company to avoid liabilities such as unsecured debts, employee entitlements, taxes, adverse court judgments and fines. Phoenix activity has become a significant concern for governments because of the number of individuals promoting illegal phoenix activity, the significant loss of tax revenue it causes, and the recognition of the potentially devastating impact it has on creditors and employees. This report is the third by the authors dealing with phoenix activity. The first report examines the various historical attempts to define phoenix activity and identifies five categories of phoenix activity ranging from legitimate business rescue to complex illegal phoenix activity and provides examples of each. The second report captures all available data relating to the incidence, cost and enforcement of laws dealing with illegal phoenix activity. In this report, the authors propose reforms aimed at better detection, disruption, punishment and deterrence of illegal phoenix activity.

Suggested Citation

Anderson, Helen L. and Ramsay, Ian and Welsh, Michelle Anne and Hedges, Jasper, Phoenix Activity: Recommendations on Detection, Disruption and Enforcement (February 27, 2017). U of Melbourne Legal Studies Research Paper. Available at SSRN: https://ssrn.com/abstract=2924277 or http://dx.doi.org/10.2139/ssrn.2924277

Helen L. Anderson

Melbourne Law School ( email )

University of Melbourne
Melbourne, 3010
Australia
+61 3 90355467 (Phone)

Ian Ramsay (Contact Author)

Melbourne Law School - University of Melbourne ( email )

University Square
185 Pelham Street, Carlton
Victoria, Victoria 3010
Australia
+61 3 8344 5332 (Phone)

HOME PAGE: http://law.unimelb.edu.au/about/staff/ian-ramsay

Michelle Anne Welsh

Monash Business School ( email )

Wellington Road
Clayton, Victoria 3168
Australia

Jasper Hedges

Australian National University, Research School of Social Sciences ( email )

Canberra
Australia

HOME PAGE: http://www.anu.edu.au

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