Phoenix activity: recommendations on detection, disruption and enforcement

Business ethics Corruption Australia


This is the third and final report of the project, Phoenix Activity: Regulating Fraudulent Use of the Corporate Form (‘Phoenix Project’), which is being undertaken by staff at Melbourne Law School and Monash Business School. The Phoenix Project is funded by the Australian Research Council’s Discovery Projects funding scheme (Project DP140102277). The Project seeks to enhance Australia’s economic stability by determining the best methods of addressing fraudulent use of the corporate form without unduly inhibiting its proper use.

Phoenix activity essentially involves one company taking over the business of another company that is wound up or abandoned where the controllers of both companies are the same people or their associates – Newco arising from the ashes of Oldco, having shed Oldco’s debts and other obligations. In practice, phoenix activity has many guises. Newco may be newly formed or may already be in existence; Oldco may or may not transfer assets to Newco, and if it does transfer assets, the price may or may not be arm’s length. Oldco’s controllers may have legitimate or improper motives.

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