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Phoenix activity relates to a transaction where a company director sells or transfers the assets (i.e. plant & equipment, stock, customer list, etc.) and business of an insolvent company to a new company in which they are also company director or otherwise associated with.

It is very important to understand that phoenix activity is illegal, and restrictions are placed on directors under Australian law to deter this from occurring.

Phoenix activities are also a breach of a director’s duties, and therefore directors also need to be aware that civil and criminal penalties and director banning exists for illegal phoenix activities if identified by a Liquidator.

If a Liquidator (i.e. Insolvency Specialist) is appointed to your company, they have a duty to collect and realise the company’s assets for the benefit of the Liquidation. As part of the process, the Liquidator will sell all available assets of the company. This means the Liquidator will have the responsibility of recouping as much money as possible to repay the company’s outstanding creditors (i.e. debts).

You may be asking yourself, “which assets can be sold in the Liquidation process?”. Assets can include motor vehicles, machinery, IT equipment, property and stock. Sometimes company assets subject to a lease, hire purchase or loan are exempt from the sale process as the financier may take control of the process.

The May 2019 insolvency statistics have been published by the Australian Securities & Investments Commission (ASIC) and What Is Liquidation? has summarised some key points about what’s happening in the insolvency market.  

According to ASIC’s statistics there are 654 registered Liquidators in Australia as at May 2019 and 250 of them are placed in NSW. The table below provides a breakdown of the location of registered Liquidators.

if your company is facing financial difficulties, don’t bury your head in the sand, seek professional advice from a Liquidator (Insolvency Practitioner) to work out if voluntarily liquidating your company is the best option for you.

It is very common for directors to voluntarily liquidate their company and one popular option is a Creditors Voluntary Liquidation. This option is better than one or more of your company’s creditors taking legal action and placing your company into Liquidation.

When you are faced with placing your company into Liquidation (mainly a Creditors Voluntary Liquidation) in Australia there are a range of issues that need to be addressed. The way you liquidate your company in Australia will vary depending the specific circumstances of your company.

If you are considering placing your company into Liquidation don’t overlook the experience of the Liquidator (Insolvency Specialist) themselves and their ability to liquidate your company in Australia.

Directors looking to place their company into Voluntary Administration often ask how long the Voluntary Administration process will last. The quick answer to this is between 20 to 25 business days only if there a no complexities involved and the creditors decide to place the company into Liquidation, or the Voluntary Administration should end.

To get a better understanding of the Voluntary Administration process What Is Liquidation? have detailed the key steps and timeframes in a Voluntary Administration.

It is essential for Company directors to be aware that when a Receiver has been appointed to your company (or if you suspect that a Receiver may be appointed), that a Receiver may sell your company property (i.e. Company assets) to pay back the debt owing to the secured creditor.

A Receiver will generally have a wide range of powers to sell Company assets on such terms a Receiver thinks fit, and this will include selecting the appropriate method of sale.

Every year, Australian directors turn to us when they need assistance in resolving their company’s financial difficulties and in most cases when no action is undertaken, there is a strong possibility that a creditor will enforce a formal insolvency procedure (i.e. Receivership or even Liquidation).

At What Is Liquidation we have seen a thing or two of creditor intentions to recover money owed to them even if it means the sale of a business or any valuable assets to pay back what is due to them.

Then there is the scenario of a Voluntary Administration, that provides immediate protection to your company giving the time the Voluntary Administrator needs to help formulate a business plan to save your company, but the only catch is the Voluntary Administrator will take control of your company.

As a company director you most likely do not want to be in a position where your company is heading towards a formal insolvency appointment (i.e. Liquidation or Voluntary Administration) because one of the main concerns could be around what this may mean to the employees of your company.

Breaking the news to your employees can be a stressful and difficult task, because there is the real possibility of closing the doors to your company and leaving your employees without a job.

So how and when is the best time to break the news? There is never a ‘good time’ but once the future of your company has been determined, employees should be advised in a timely manner (as soon as possible).

It has just been over a year now since the commencement of the new rules relating to creditors’ rights under the Insolvency Law Reform Act 2016 and the Insolvency Practice Rules which came into effect in September 2017. This has resulted in increased powers for creditors involved in External Administrations.

In this article the term ‘External Administrator’ relates to Liquidators, Voluntary Administrators and Deed Administrators and ‘External Administration’ has an associated meaning.