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Pheonix Companies- Here one minute gone the next!


Are you a director of a company in the building and construction sector?  The high instances of insolvencies in the building and construction sector is being investigated by several Government agencies for illegal phoenix activities.

Be aware that participation in phoenix behaviour is an illegal practice. Contact us if you require any clarification or advice.

Phoenix activity is where a company deliberately goes into liquidation to avoid paying tax, creditors or employees and then resurrects through a different entity.

Definitely illegal but, unfortunately a path some business owners take. During the first two quarters of 2013, the building and construction sector accounted for more insolvencies than any other industry in Australia. Across the country, New South Wales was the worst affected. In September, 2013, in an attempt to stem this growing problem, ASIC announced plans to conduct surveillance of over 3,000 entities and individuals trading within the building and construction sector.

At the same time, the Tax Office will investigate 2,000 property developers who have placed their companies into liquidation with outstanding GST obligations on multiple occasions. Last year’s Collins inquiry into insolvency in the New South Wales construction industry recommended the New South Wales Government to establish a commission to regulate the industry.

Other states, such as Queensland, are considering implementing the power to refuse builder licenses to:

  • Individuals who flout the bankruptcy laws or who have been bankrupt in the last five years; or
  • Individuals who were directors or acted in position of influence of companies going in liquidation or administration voluntarily or by order within twelve months.

A report commissioned by the Fair Work Ombudsman last year estimated that illegal phoenix activity costs the Australian economy between $1.78 to $3.19 billion per annum.

So what can you do? There are steps you can take to prevent or minimise the chance of dealing with one of these companies.

Contact Us to get clarity on what you can do.

Remember: – Even just one phoenix activity alone can have a huge domino effect on you and your business associates.Back to Newsletter

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