Phoenix Activity
The improper practice of shifting a failing company's business to a new entity to avoid paying creditors, employees or tax.
What phoenix activity is
Phoenix activity describes the practice of deliberately winding up or abandoning a company that owes debts, then continuing essentially the same business through a new company so as to leave the debts behind. Where this is done to avoid paying creditors, employees or tax, it is treated as improper. The new company effectively rises from the ashes of the old one, hence the name.
How it is viewed
Regulators and liquidators take illegal phoenix conduct seriously, and it can attract investigation and recovery action. Not every business restructure is improper, but using a new entity to dodge legitimate debts is. This is general information only and not legal or financial advice. If you suspect a debtor has phoenixed, you can refer a debt and we can discuss the position.
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