ASIC action on illegal phoenix activity

ASIC works with other government agencies to detect, deter and disrupt directors and advisers that engage in illegal phoenix activity. Illegal phoenix activity is where a new company is created to continue the business of an existing company that has been deliberately liquidated to avoid paying outstanding company debts, which can include taxes, trade creditors and employee entitlements.

How ASIC is combating illegal phoenix activity

ASIC uses regulatory strategies to disrupt illegal phoenix activity. These strategies aim to deter directors and facilitators from engaging in illegal phoenix activity, hold them accountable if they have breached the law and protect creditors, employees, consumers and government revenue.

ASIC’s approach involves:

  • Education and outreach – We engage with industry representatives to identify companies potentially at risk of engaging in phoenix activity to ensure they are aware of their legal obligations and raise awareness.
  • Surveillance and compliance – We identify directors who have a history of failed companies and use data analytics to determine if they may engage in future illegal phoenix activity. We conduct surveillance and use compliance strategies to prevent further offences.
  • Request Assistance for External Administration - If directors don't give books and records to the liquidators or report a failed company's affairs, ASIC assists the appointed liquidators to obtain them and prosecute the directors.
  • Assetless Administration Fund (AA Fund) – ASIC can provide a monetary grant to liquidators to help them compile a report into the failure of a company. This is only available where there are not enough assets to fund the preparation of the report.
  • Disqualifying directors – Directors are disqualified from managing corporations where they have been involved in two or more companies placed into liquidation in the past seven years.
  • Enforcement action – ASIC takes action against those who facilitate, aid or abet illegal phoenix activity, including against directors who breach their duties.

As part of our education and outreach activities we prepare articles and presentations on issues around illegal phoenix including:

Working with other Government agencies and law reform

ASIC works with other government agencies including the Australian Taxation Office, Fair Work Ombudsman and the Department of Employment through the Phoenix Taskforce and Serious Financial Crime Taskforce to exchange intelligence and information about illegal phoenix activity. The Phoenix Taskforce uses data matching tools to identify, manage and monitor suspected illegal phoenix activity.

ASIC also works with Government on potential law reform measures and has contributed to various reports on illegal phoenix activity prepared by Government including the Economic Impact of Potential Illegal Phoenix Activity Report commissioned by the ATO in 2018.

Illegal phoenix prosecutions and outcomes

Here is a list of ASIC prosecutions and outcomes against company directors, business advisers and liquidators who have engaged in illegal phoenix activities. 

Company directors

2019

2018

  • Allan Saunders, Metropolitan Design Pty Ltd
  • MJC Project Group Pty Ltd
  • Jason Hammond, LLM Rivits Pty Ltd, Dongrove Pty Ltd, Newcastle Bridal House
  • Jannine Fergusson, Motorcycle Express Australia Pty Ltd
  • Allan Raad and Joseph Bazouni,  Cornish Property Services Pty Ltd, Flow Management Pty Ltd
  • Paul Flackmorr, Mega Energy Gas Pty Ltd
  • Adam Copping, Trac Developments Pty Ltd
  • Peter Kalos , Always Demolition & Excavation Pty Ltd, PK Management Consulting Services Pty Ltd, Arndt Investments Pty Ltd, Ramlaw Holdings Pty Ltd, Worthville Pty Ltd, Platinum Projects (Australia) Pty Ltd, PKM Group Holdings Pty Limited, Omikron Industrial Supplies Pty Ltd, Sylvania Seaside Developments Pty Ltd
  • Charles Clarke, CMTC Pty Ltd, CCSLS Services (VIC) Pty Ltd, CC Specialized Landscape Services Pty. Ltd, CCSLS Holdings Pty Ltd
  • Amy Timko, Twisted Little Company Pty Ltd, Noodle Box franchises
  • Lorraine Bullock, Twently12 Pty Ltd

2017

  • Michael Davey, Refractory Construction Pty Ltd, A4dable Geeks Pty Ltd
  • Steven Soong, Kalnosa Pty Ltd, Linsari Pty Ltd, Larsay Pty Ltd
  • Peter Gillam, Alliance Merchandising Pty Ltd, Alliance Sales and Merchandising Pty Ltd, PBL Distributors Pty Ltd, Allploy Pty Ltd
  • Sheila McAulay, Greenlay Enterprises Pty Ltd
  • James Meaden, Brimarco Pty Ltd
  • Paul Hanson, Wida Plumbing Supplies Pty Ltd
  • Lorraine Bullock, Twently12 Pty Ltd
  • John Shannon and Jason Shannon, Darling Downs Express Transport Pty Ltd, Line Haul and Bulk Pty Ltd, BTK Communications Pty Ltd, Darling Downs Express Transport Courier Services Pty Ltd, Darling Downs Express Transport Employment Services Pty Ltd.

Business advisers

Liquidators

Find out more about ASIC’s Enforcement outcomes.

Related links

 

ASIC industry funding

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12 June 2020

A consultation version of the Cost Recovery Implementation Statement 2019-20 (CRIS)  has been released.

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Last updated: 12/10/2020 03:59