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Countering Illegal Phoenix Activity

Illegal phoenix activity is defined as a step to establish a brand new company to continue operations of an already existing organisation purposely dissolved in order to avoid payment of that organisation’s debts (including taxes, credits and employee benefits).

This activity adversely impacts upon the business community, employees, contractors, government and the environment through the non-payment of wages, taxes, employee benefits and government taxes, non-payment to suppliers and non-compliance with regulatory obligations, by the dissolved organisation.

One can counter the activities of a phoenix organisation by conducting due diligence and obtaining background verification on the organisation prior to engaging with it in any commercial way.

At a minimum, such a verification process should include:

  • Confirming that the organisation is registered with ASIC and has an ABN;
  • Conducting a credit check on the organisation;
  • Seeking references for the organisation within the business community;
  • Obtaining ASIC’s latest report for the organisation;
  • Conducting thorough research with respect to the organisation and its board. Check for yourself whether the organisation has been involved in any form of misconduct;
  • Charge the organisation upfront for any services provided to them;
  • Include a term in your agreement with the organisation that it must pay all taxes as and when they fall due. This is will create a contractual binding obligation.

In a bid to counter illegal phoenix activity, the Federal Government has set up a Phoenix Taskforce that comprises 20 Federal, State and Territory government agencies/bodies including the ATO, Australian Securities & Investments Commission (ASIC), Department of Employment and the Fair Work Ombudsman. This Taskforce aims to combat illegal phoenix activities. It provides tools to assist in identifying, managing and monitoring suspected illegal phoenix organisations, deals firmly with those identified and mitigates such organisations posing substantial risk to the integrity of the corporate system.

For further information or assistance, please contact Meghan Warren, Principal of Burke & Associates Lawyers.

Contacts

Meghan Warren

Principal

Meghan Warren

Principal
LL.B GAICD B.Bus (FinPlan)
Meghan is one of the few lawyers in Australia admitted in the State (Victoria) and Federal jurisdictions of Australia, and as an Attorney at Law to the New York State Bar in the United States.

Kristy Muhlhan

Principal

Kristy Muhlhan

Principal
LL.B (Hons) GRAD DIP. L.P., GAICD.
Since 2014, she has been an owner and Principal of the firm and has mastered a broad range of essential commercial and business skills which go hand in hand with the work she does for...

Rosy Roberts

Principal

Rosy Roberts

Principal
LL.B (Hons) B.A GAICD
Rosy has extensive experience in Litigation & Alternative Dispute Resolution having represented clients in all Victorian State Courts and the High Court of Australia. She is also a VCAT appointed Administrator.

Anthony Burke

Consultant

Anthony Burke

Consultant
B.A LL.B DIP.FIN. MGT
Tony is an LIV accredited business law specialist and a VCAT appointed Administrator. In 2008 he was President of the Law Institute of Victoria and served for two years as a director of the Law...

Stewart Davis

Associate

Stewart Davis

Associate
LL.B (Hons) B.Com
As well as property law, Stewart has had exposure to VCAT administration matters and commercial law, particularly servicing developer clients.

George Hanger

Associate

George Hanger

Associate
LL.B BA
George was admitted to legal practice in May 2015 after completing a Bachelor of Arts at the University of Melbourne and a Bachelor of Laws at Monash University.

Antonela Graso

Paralegal

Antonela Graso

Paralegal
Whilst completing her professional business and law tertiary qualifications, Antonela provides efficient and effective legal support services to our valued teams and clients.

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