FED:Govt moves against 'phoenix' directors

AAP General News (Australia)
12-20-2011
FED:Govt moves against 'phoenix' directors

CANBERRA, Dec 20 AAP - The federal government is going after directors of failed companies
who, having avoided liability for workers' entitlements and other debts, restart the business
under a similar name.

Under draft legislation released by the government on Tuesday, directors of a failed
company can be held liable for its debts if their new company has a similar name.

The practice is commonly referred to as "phoenixing".

"This will stop directors from exploiting the limited liability protections in the
corporations law to avoid having to pay any debts," parliamentary secretary David Bradbury
said in a statement.

"This will ensure that directors cannot keep racking up debts through multiple phoenix
companies and escape their obligations."

Under a second bill, the government will give the Australian Securities and Investments
Commission the power to wind up a company that appears to no longer be carrying on its
business.

That will ensure government payments to companies, such as paid parental leave, will
get to employees.

The draft bills can be found at www.treasury.gov.au.

AAP rl/sn

KEYWORD: PHOENIX

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