With illegal phoenix company activity costing the Australian economy more than $3 billion annually, the time has come to well and truly crackdown on this scourge. The concept of a phoenix company is quite simple, an insolvent business transfers assets below fair market price to a related company. Whereby, intentionally denying unsecured creditors access to the company’s assets. This then leaves a corporate shell in liquidation, unable to pay its debts to creditors. More worryingly it creates a phoenix company reborn from the ashes with same directors in the same industry, with the ability to do the same thing.

With new changes to Australia’s corporate insolvency laws coming into effect next month, it is important to be aware of the salient features of these changes and some of the reasons why they’re occurring.