Reforms to combat illegal phoenix activity – Draft Legislation
The submission to the Treasury’s consultation on the Reforms to combat illegal phoenix activity – Draft Legislation was prepared by the Law Council. The Law Council is grateful for the assistance of the Insolvency and Reconstruction Committee and the Corporations Committee of the Business Law Section and the National Criminal Law Committee in the preparation of this submission.
The proposed amendments are a significant step in advancing the government’s policy to address community and business concerns about the incidence of improper phoenix activity and will seek to reduce its harmful effects on the economy. The Law Council has long advocated a need to increase regulation of pre-insolvency advisors and these amendments are a step in the right direction to tackle the complex problems posed by phoenix activity.
Although the Law Council broadly supports the move to increase regulation of improper phoenix activity, several concerns remain about the wording of the proposed provisions. If the current wording is not amended, the Law Council is concerned that the introduction of the proposed provisions may be counter-productive to the government’s initiatives to encourage good faith restructuring and turnaround through the introduction of the safe harbour for directors.
You can read the full submission below.