1.Phoenix Activity
Phoenix Activity is a term which defines a particular process where a new company has formed for the when an old company has failed to process the corporation due to some failure according to the tem of the corporation. The corporation act has defined the Phoenix Activity for both legal and illegal ways. It is a process where a company has provided with the entitlement with commercial entity where it gets involved with the insolvency of the corporation process (Anderson, et al. 2016).
The Phoenix Activity only gets the involvement where the authority of the previous company has emerged with any failure then they formed another similar corporation where the Phoenix Activity helps to operate the company for gaining their loss and runs the business (Giardina, & Pinto, 2014). Therefore if the illegal activity has been identified in the application of phoenix activity then it will describe the corporation condition for the illegal intension by the unsecured creditors for operating the similar business. It also identified as legal process when assets of the corporation has been taken care for the application of jobs and other entitlements through the employees for the benefits in the employments (Hedges, et al.).
2.Phoenix Activity is found helpful and profitable when it become helpful for the society and also applicable in the crisis management when the corporation is under the financial distress. It only occurs when the Phoenix Activity application is became illegal for the company management (Giardina, & Pinto, 2014).
This activity is basically applied on the company when it identified as a illegal corporation and therefore they use the resolve process in the corporation business. The regulators are applied also for the recovery of the loss for the illegal corporation process. It has been also found that in this matter the incorporation of the successor company will applied the regulators for following such evidences. The Phoenix Activity always applied on the corporation individually where it functioned in a multiple corporate process in a certain periods. The application of the Phoenix Activity has found to process for the protections of the corporations like the Royal Commissions, various parliamentary committees and law govern bodies (Giardina, & Pinto, 2014). It is only for the limited liabilities companies where they suffered due to the illegal conducts. The Phoenix Activity sometimes uses the wastes corporate assets which provide the priorities of insolvency while they transferred the whole assets to the new company along with the new entity (Anderson, et al. 2016).
3.While the affected company is suffered due to the financial disabilities, deliberate and systematic liquidation then the Phoenix Activity is defined and applied for such condition (Hedges, et al.). The corporate trading entity also get affected when the Corporation involved with illegal or fraudulent intentions it only affected as helpful activity when the application of finish activity helps to avoid tax and every other liabilities with the entitlements of employment (Giardina, & Pinto, 2014). Now there is another process where the Corporation continues their business through a structural framework of operation which helps them to take the profits of the business along with the collaboration of another trading entity and the Phoenix activity them help the company in it. When the Phoenix activity is used in a several suggested process 8 only applicable according to the uses of various proportions of scales for the identification of the issues in the corporation’s (Giardina, & Pinto, 2014). Therefore the potentiality of the liabilities also applied through the Phoenix activity (Anderson, et al. 2016). The company applied search framework of strategies according to the situation of the corporation where it process the involvement through it (Hedges, et al.).
4.In most of the cases it has been found that while the application of illegal Phoenix activity the directors of the corporation is actually held liable where they try to process the payment to the company’s creditor as per the rules of the corporation. In most of the situation the illegal Phonics activity involved in the process where it helps to identify every stakeholders where the assistant of legal action can be taken against them. The involvement of the activity also helps infringing on the business process only for the incorporating companies. In this process the government also has possibilities to Richard and review the desirability of business service provider who involved in the selling aged sale companies (Giardina, & Pinto, 2014).
The assistance of external administrator interference in the Phoenix activity helps to identify any harmful activities in the Corporation. However it is also important to mention that if the liquidator has make the finalization about the affair of corporations then they started to investigate for the purpose of recovering damaged property and it will provide benefits for the corporation along with the predators. Therefore the benefits should be distributed to the corporations where the remaining assets also send to the Australian and securities investment commission (ASIC). It also gets involved with the Phoenix activities for the enforcement and get back external administration who is found and identified as harmful of them. It also provides the enforcement where it needs to share (Anderson, et al. 2016).
The corporate trading entity also get affected when the Corporation involved with illegal or fraudulent intentions it only affected as helpful activity when the application of finish activity helps to avoid tax and every other liabilities with the entitlements of employment. Now there is another process where the Corporation continues their business through a structural framework of operation which helps them to take the profits of the business along with the collaboration of another trading entity and the Phoenix activity them help the company in it (Giardina, & Pinto, 2014). When the Phoenix activity is used in several suggested process which only applicable according to the uses of various proportions of scales for the identification of the issues in the corporations. Therefore the potentiality of the liabilities also applied through the Phoenix activity (Anderson, et al. 2016).
The company applied search framework of strategies according to the situation of the corporation where it process the involvement through it (Hedges, et al.).
In most of the cases it has been found that while the application of illegal Phoenix activity the directors of the corporation is actually held liable where they try to process the payment to the company’s creditor as per the rules of the corporation. In most of the situation the illegal Phonics activity involved in the process where it helps to identify every stakeholders and the assistant of legal action can be taken against them. The involvement of the activity also helps infringing on the business process only for the incorporating companies. In this process the government also has possibilities to Richard and review the desirability of business service provider who involved in the selling aged sale companies (Anderson, et al. 2016).
The assistance of external administrator interference in the Phoenix activity helps to identify any harmful activities in the Corporation. However it is also important to mention that if the liquidator has make the finalization about the affair of corporations then they started to investigate for the purpose of recovering damaged property and it will provide benefits for the corporation along with the shareholders (Hedges, et al.). Therefore the benefits should be distributed to the corporations where the remaining assets also send to the Australian and securities investment commission (ASIC). It also gets involved with the Phoenix activities for the enforcement and gets back external administration that is found and identified as harmful of them. It also provides the enforcement where it needs to share (Giardina, & Pinto, 2014).
The section 588 G of the Corporation Act 2001 defense the directors duty to prevent in solvent reading by the company when the illegal Phoenix activity has detected in the Corporation the directors are bound to prevent such illegal activities where it involved with the wrong effect and damages for the Corporation if any reasonable Grounds has been found regarding the damages then this section will provide the legislation where the directors will insolvent with the issues (Giardina, & Pinto, 2014).
The section 588H of the corporation that has the defense legislation as per the insolvent reading by the director in the Section 588 G of Corporation Act if the insolvency has found in the corporation due to the illegal Phoenix activity then this legislation will provide defense for the person who is related regarding the illegal activities and incurred debts and the ground will be prove as per the according Corporation Act (Anderson, et al. 2016) (Hedges, et al.).
5.The Phoenix activity is related with the companies where it applied the legislation under the Corporation Act along with the Australian securities investment Commission which applied the discretionary power regarding the abundant company (Hedges, et al.). Therefore under the section 489A of the corporation act provides legislation where it can be applicable in the discretionary power for the corporations. The Federal Government of Australia in 2011 immense legislation for the exposure draught on the Phoenix activity and regarding the new legislation it only forced for Australia Government for the Corporation and similar names which will be introduced but it never indicate from when it will be registered for the companies of the Phoenix activities (Anderson, et al. 2016).
6.The section 180 of the Corporation Act 2011 defines the duties of the director which they owned towards the Corporation therefore according to the Phoenix activities if the director of the corporation has found to have any relation with this illegal activities then it will define that the director has breach the duty of care towards the Corporation (Giardina, & Pinto, 2014). The general law and statue of the Corporation Act has described the duty of the directors according to the Corporation Act where they are bound to therefore the corporation fit due diligence and they must not make any negligence e or any other illegal relationship illegal Phoenix activities. The directors of the company is applied a fiduciary relationship where the director exercise their power of discretion and it make the effort the interest of that person who is exercise equitable duties of a director along with the impacts of the director power (Hedges, et al.). The section 181 of the Corporation Act define the duties of the director where the directors has owned the duty which must be de facto and Shadow directors and they should establish a good faith as being in the position of officers and director. The directors are not allowed to use the position in the corporation or disclosed any information related with the Corporation for exercising on the personal benefits. They on their duties either civil or criminal ways that make the allegations with their ability for the Corporation (Giardina, & Pinto, 2014). For the Civil penalty of the breach of directors duties the ASIC the penalty would be $20,000 for the relation with the contravention and disqualification orders of compensation orders the Civil penalties always make the perceive along with the association of criminal regions where the corporation crime also make the involvement in the presence of Phoenix activities it only establishes due to the evidence requirement and burden of proof by the corporate bodies (Anderson, et al. 2016).
In the part of criminal sanction where the directors has bleach their duties which could be various violence or combinations of dishonesty recklessness or intentions then a s I c will order for the penalties up to 5 years of imprisonment or $36,000 for offence.
7.In the case of ASIC v Somerville & Ors [2009]the court has found that the directors of that Corporation breached their duties of care buy from an agreement to sell the Assets of the company without any information and involvement of illegal Phoenix activity towards another new company (Hedges, et al.). In this matter the Australian securities and investment Commission has introduced various allegations and charges against the director who has fail to meet with the section 181, 182 and 183 and breach the legislations according to the Corporation Act 2011. Here the disqualification water has been pushed against the directors of that company who breach the duties and also find with the penalties of the compensation capital amount for selling the company assets without the knowledge of the authority of the corporation it has been also included that without any real consideration it could be recognized as illusory and the dividend was not declared of V class share now the buyer of the company possibly make any payment for the assets therefore the vendor company must not on the part of the dividend share (Hedges, et al.).
8.The Phoenix activity establishes when a company is failing in the corporation then another new company incorporated from the ashes with different and essential with the same controllers and business partners of previous company. The legal value is described in it only applicable when the failing company’s assets and other relevant materials are maintained by the same employees where they are keeping their jobs and entitlements. Therefore according to the business corporation it will be recognized as legal Phoenix activity or business rescue. However in the repeated resurrection of business, it makes the difficult entities which define as legal Phoenix activity or business risk according to the Corporation Act (Anderson, et al. 2016).
When another company has form for the maintenance of the Assets of the previous failing company then a liability is arise for the corporate group who provided the wages, superannuation, contributions of paying tax and deliberately liquid to avoid paying all the debts of the company in the Phoenix activity. In the year of 1994 Victorian law Reform Committee report has published an exclusive report of illegal Phoenix activity in Australia where they stated that the limited liability companies when unable to pay the debts to their creditors or the employees then it fails to continue the business and under this liability (Hedges, et al.). Therefore it is an illegal Phoenix activity. In the year of 1996 where the Australian securities Commission (ASIC) have published another report where they mentioned about the illegal Phoenix activity which is involved in insolvent trading. In 2003 the cold Royal Commission report has published the illegal Phoenix activities in the relation with the building and construction Industries where they have mentioned about Phoenix companies who are identified its victims and according to the Corporation Act 2001. The breach of the company’s constitutions, breach of directors duties where they misbehaving and breach of duty of care with the previous companies legislations has make some hazards and arise many questions about the implication of Phoenix activity. Therefore the maintenance of the assets and paying the depth is one of the important parts in the Phoenix activities (Anderson, et al. 2016).
9.The illegal Phoenix activity helps to identify the entire stakeholder to assistant from any legal action against the directors (Hedges, et al.). it also assist external administrator to detect from any harmful Phoenix activity if the liquidator finalized the affair of companies they investigate for recovering the property for the benefit of creditors and distribute the company’s remaining assets. The Australian & Securities Investment Commission (ASIC) involves with Phoenix activity for enforcement and recover every external administration which are help to play in relation to detecting harmful of Phoenix activity and share the information (Anderson, et al. 2016).
References
Anderson, H. (2016). Corporate law and the phoenix company. Routledge Handbook of Corporate Law, 114.
Anderson, H. L., Hedges, J., Ramsay, I., & Welsh, M. A. (2017). Illegal Phoenix Activity: Is a’Phoenix Prohibition’the Solution?.
Anderson, H. L., Ramsay, I., & Welsh, M. A. (2016). Illegal phoenix activity: Quantifying its incidence and cost.
Anderson, H., & Haller, L. (2014). Phoenix Activity and the Liability of the Advisor. Sydney L. Rev., 36, 471.
Anderson, H., Hedges, J., Ramsay, I., & Welsh, M. (2016). Illegal phoenix activity from the insolvency practitioner’s perspective. Australian Restructuring Insolvency & Turnaround Association Journal, 28(4), 23.
ASIC v Somerville & Ors [2009] NSWSC 934 (8 September 2009)
Giardina, A., & Pinto, D. (2014). A proposal to address the impact of fraudulent phoenix activities on unremitted superannuation guarantee contributions in Australia. J. Austl. Tax’n, 16, 74.
Hamilton, J. (2017). Do I need an accountant or a lawyer when my company is in financial trouble?. Governance Directions, 69(4), 231.
Hedges, J., Anderson, H. L., Ramsay, I., & Welsh, M. A. (2017). No’Silver Bullet’: A Multifaceted Approach to Curbing Harmful Phoenix Activity.
Morrison, D., & Anderson, C. (2015). Is corporate rescue a realistic ideal? Business as usual in Australia and the United Kingdom. Nottingham Insolvency and Business Law e-Journal, 2015(3), 417-435.
Price, J. (2016). The regulator: Illegal phoenix activity. Company Director, 32(5), 15.
Welsh, M., & Anderson, H. (2016). The Public Enforcement of Sanctions against Illegal Phoenix Activity: Scope, Rationale and Reform. Fed. L. Rev., 44, 201.
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