Directors disqualified for engaging in illegal phoenix activity

ASIC has adopted a practice of issuing combined media releases about administrative action. There is no relationship between the matters or the subjects in this media release, except that ASIC has taken administrative action.

Disqualification of Andrew Yiasemides

ASIC has disqualified Mr Andrew Yiasemides of West Gosford, New South Wales, from managing corporations for five years.

Mr Yiasemides was disqualified for his role in the failure of five companies:

  • Bon Bon Strand Pty Limited A.C.N. 150 893 691 (Bon Bon Strand);
  • Bon Bon Investments Pty Limited A.C.N. 135 620 665 (Bon Bon Investments);
  • Limar International Pty Limited A.C.N. 137 191 158 (Limar International);
  • Bon Fleur Australia Pty Limited A.C.N. 126 090 284; and
  • Danhold Pty Limited A.C.N. 078 708 184.

The companies were involved in the manufacture of confectionary products.

ASIC found that Mr Yiasemides:

  • Failed to exercise his powers and discharge his duties as a director, maintain proper company records, and ensure taxation lodgements and obligations were fulfilled;
  • Failed to assist the liquidator by not providing requested information;
  • Improperly used his position as director for his personal benefit and to the detriment of the companies; and
  • Misused the corporate form when he transferred the business to another company, leaving insufficient assets to pay creditors.

The companies collapsed owing creditors more than $6.4 million.

In making the order to disqualify Mr Yiasemides, ASIC relied on the supplementary reports lodged by the liquidator of Bon Bon Strand, Bon Bon Investments and Limar International. The liquidators received funding from the Assetless Administration Fund to prepare and report their findings to ASIC.

Mr Yiasemides is disqualified until 28 May 2025.

Disqualification of Con and John Andrew Demetriou

ASIC has disqualified brothers Con Demetriou and John Andrew Demetriou of Adelaide, South Australia, from managing corporations, each for four years.

Mr Con Demetriou was a director of four failed companies:

  • Santos Cleaning Pty Ltd ACN 616 653 788 (Santos Cleaning);
  • CAD Cleaning Pty Ltd ACN 606 387 704 (CAD Cleaning);
  • Enhanced Training Services Pty Ltd ACN 138 691 844; and
  • Surconan Superannuation Fund Pty Ltd ACN 140 859 472.

ASIC found that Mr Con Demetriou:

  • Failed to ensure Santos Cleaning and CAD Cleaning complied with their obligation to lodge tax documents with the Australian Taxation Office;
  • Allowed Santos Cleaning to transfer over $1 million to a related entity which caused Santos Cleaning to fail;
  • Failed to prevent Santos Cleaning from trading whilst insolvent;
  • Failed to keep adequate books and records in relation to Santos Cleaning and inform himself of the solvency position of CAD Cleaning;
  • Engaged in conduct commonly known as illegal phoenix activity by transferring the business of CAD Cleaning to a related entity for uncommercial terms; and
  • Breached his obligation to discharge his duties as director with a degree of care and diligence.

Mr John Andrew Demetriou was the director of three failed companies:

  • Commercial Cleaning Edge Pty Ltd ACN 137 381 974 (Commercial Cleaning Edge);
  • CAD Cleaning Pty Ltd ACN 606 387 704; and
  • Enhanced Training Services Pty Ltd ACN 138 691 844.

ASIC found that Mr John Andrew Demetriou:

  • Failed to ensure that Commercial Cleaning Edge and CAD Cleaning complied with their obligation to lodge tax documents with the Australian Taxation Office;
  • Failed to prevent Commercial Cleaning Edge and CAD Cleaning from trading whilst insolvent;
  • Failed to assist the liquidator of CAD Cleaning by not providing requested information;
  • Engaged in conduct commonly known as illegal phoenix activity by transferring the business of Commercial Cleaning Edge to CAD Cleaning for no consideration; and
  • Breached his obligation to discharge his duties as director with a degree of care and diligence.

Most of the companies managed by Messrs Demetriou were involved in commercial cleaning.

Collectively, the total amount owed by the companies to unsecured creditors was in excess of $2.1 million.

In making its decision to disqualify Messrs Demetriou, ASIC relied on supplementary reports lodged by the liquidators of Santos Cleaning, Commercial Cleaning Edge and CAD Cleaning. ASIC assisted those liquidators in preparing their supplementary reports by providing funding from the Assetless Administration Fund.

Mr Con Demetriou is disqualified until 2 April 2024.

Mr John Andrew Demetriou is disqualified until 4 December 2023.

Disqualification of Nathan Barnwell

ASIC has disqualified Mr Nathan Barnwell, of Murarrie, QLD, from managing companies for four years.

Mr Barnwell was the director of two failed companies:

  • Appafy Interactive Pty Ltd ACN 614 065 511 (Appafy Intercative); and
  • Fiji Recreation Aqua-Sport Exploration Society Pty Ltd ACN 600 140 636.

The companies were involved in the development of IT products.

ASIC found that Mr Barnwell:

  • Failed to exercise his duties as a director with due care and diligence, including failing to lodge documents with and pay taxes to the ATO;
  • Allowed a company to continue to trade while insolvent;
  • Failed to assist the liquidator by not providing requested information; and
  • Transferred the business of a company to a related company for no consideration, prior to a liquidator being appointed.

The companies collapsed owing creditors approximately $1.55m.

In making its decision to disqualify Mr Barnwell, ASIC relied on supplementary reports lodged by the liquidators of both companies. ASIC assisted the liquidator of Appafy Interactive to prepare a supplementary report by providing funding from the Assetless Administration Fund.

Mr Barnwell is disqualified until 2 April 2024.

Background

Section 206F of the Corporations Act allows ASIC to disqualify a person from managing corporations for up to five years if, within a seven-year period, the person was an officer of two or more companies, and those companies were wound up and a liquidator provides a report to ASIC alleging misconduct or about the company’s inability to pay more than 50 cents in the dollar to unsecured creditors.

ASIC also maintains a ‘Banned and Disqualified Persons’ register that provides information about people who have been disqualified from:

  • involvement in the management of a corporation;
  • auditing self-managed superannuation funds (SMSFs); or
  • practicing in the financial services of credit industry.

ASIC is a member of the Phoenix Taskforce, which comprises federal, state and territory government agencies who collaborate to combat illegal phoenix activity. The aim of the Phoenix Taskforce is to provide a whole-of-government approach to identify, disrupt and prosecute those who engage in or facilitate illegal phoenix activity.

Suspected phoenix activity can be reported to the Phoenix Taskforce on 1800 060 062 or online at the ATO website.

More information about ASIC action against illegal phoenix activity is available on ASIC’s website.

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