A lot of people talk about phoenixing When they talk about insolvency So what phoenixing generally is understood to involve is A company that is incurring a lot of debts
and then Rather than pay those debts out of the assets it has It simply transfers the assets To another company And then it just leaves a corporate shell That can’t pay the bills that it’s already
got And people think that’s a really bad thing
because it’s Effectively a way to rip of creditors A real example of where phoenix can occur Is in the construction industry So for example a developer might engage a number Of sub contratcors to do work And then rather than pay those sub contractors it can Transfer all the assets out of the development company To a new company and leave the subbies In the lurch for the money they’re owed And it’s important to realise that in many
cases Engaging in phoenix activity is actually illegal And if there is evidence that that’s occurred ASIC has the people the powers and the resolve to prosecute So people often say they have concerns with The conduct of people in the insolvency industry And ASIC has spent quiet a lot of resources over The past few years trying to address those
concerns And real we’re focusing on three things First of all we’re focusing on the Competence of people who are insolvency practitioners If someone takes on a job then they should
have the resources And the time to do it properly So we have come across cases in the past where very very Small firms literally have hundreds and hundreds of matters And that’s simply not good enough if they’re not delivering On what they’re supposed to be doing The second area where We focus on carefully is around independence Really practitioners should be impartial And they should be independent as required under the law And that means they need to give disclosure about what Conflicts they might have to creditors and
if creditors feel Uncomfortable with those conflicts they can vote to have the practitioner removed It’s very important that creditors realise that And then the third key area we focus on Is around improper gain which is really about Remuneration and that’s saying that Insolvency practitioners are entitled to a Reasonable fee for what they do But over charging or potentially over charging is Something that will attract our attention And we’ve actually had people removed from the profession Because they had been overcharging There’s a lot to understand about insolvency But it is important to realise there are some really Helpful resources that are available The first thing people should do is Find out who is the relevant insolvency practitioner And talk to them They’ll be able provide some guidance about what’s happening But you can also go to ASIC.gov.au That has some general information about Insolvency type issues that’s a very useful
place to go We also maintain a website which has a large number of Publications relevant to things that Are happening to companies in insolvency – and
that’s also Available from ASIC.gov.au as well So I’d strongly encourage people to use those resources