Illegal phoenixing activities spelt out in draft legislation: Ombudsman

STATEMENT

The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, said the proposed package of reforms to tackle illegal phoenixing announced yesterday clearly identifies which activities, in the course of transferring assets, are illegal.

“The focus on company directors is essential.

“Directors won’t be able to transfer company assets that affect creditor payments, and they won’t be able to backdate resignations to avoid liability or leave the company as an empty corporate shell.

“Of particular significance, pre-insolvency advisers and other facilitators will be on the radar and penalised for dodgy company asset transfers.

“Holding the facilitators accountable will reduce access to the specialist knowledge required to deliberately liquidate an entity with the intention to operate and profit through other trading entities.

“The list of proposed reforms will help minimise the impact on small businesses suffering at the hands of Australia’s phoenixing.

“Coupled with the proposed statutory trusts model and the director identification number, we will see genuine protection for subcontractors.

“Currently, if there is any money left, secured creditors come first, the employees are paid wages owing out of the federal government’s FEG (Fair Entitlement Guarantee) and the subbies are left with nothing.

“We look forward to lodging a constructive submission that will complement the draft legislation and expand on measures to deter and disrupt the core behaviours of illegal phoenixing.”

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