Catching Pre-Insolvency Advisors: The Hidden Culprits of Illegal Phoenix Activity

Company and Securities Law Journal, Vol. 35, No. 8, pp. 486-502 (2017)

19 Pages Posted: 10 Jul 2018

See all articles by Helen L. Anderson

Helen L. Anderson

Melbourne Law School

Jasper Hedges

Australian National University, Research School of Social Sciences

Date Written: 2017

Abstract

The Australian Securities and Investments Commission and Australian Taxation Office are becoming increasingly concerned about the role that pre-insolvency advisors play in promoting illegal phoenix activity. Illegal phoenix activity occurs where the directors of a company liquidate or abandon the company with the intention of avoiding its obligations and then continue the same or a similar business via a new or related company. Pre-insolvency advisors who counsel directors to engage in illegal phoenix activity are subject to liability under a range of corporate, labour and taxation laws, as well as licensing and professional conduct rules. These advisors may be either qualified professionals, such as lawyers and accountants, or unqualified “turnaround specialists”. This article explains how the existing laws and rules apply to advisors and also suggests a number of legislative and administrative reforms aimed at curtailing their participation in illegal phoenix activity, with a particular focus on early detection and prevention mechanisms.

Keywords: phoenix activity; enforcement; corporate liquidation; deterrence; insolvency; corporate law; Australian Securities and Investments Commission

Suggested Citation

Anderson, Helen L. and Hedges, Jasper, Catching Pre-Insolvency Advisors: The Hidden Culprits of Illegal Phoenix Activity (2017). Company and Securities Law Journal, Vol. 35, No. 8, pp. 486-502 (2017). Available at SSRN: https://ssrn.com/abstract=3200889

Helen L. Anderson (Contact Author)

Melbourne Law School ( email )

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

Jasper Hedges

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

Canberra
Australia

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

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