Your preferred office location:
  1. Home
  2. /
  3. Author
  4. /
  5. Daniel Morris
  6. /
  7. Australia’s long-awaited illegal phoenix activity legislation is passed
25 Feb 2021

HHG Legal Group’s Building and Construction Special Counsel, Daniel Morris, and Director Murray Thornhill provide an overview of the long-awaited illegal phoenix activity legislation, that may provide hope for some unpaid creditors.

In article Pheonix

After two false-starts, the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 has passed through both Houses of Federal Parliament and most of its provisions have now come into effect.

The new laws are intended to combat the practice of stripping a company of its assets, officers and directors, by moving them, without any or adequate compensation or remuneration, to another entity being run by the same directors, officers and/or management team. The stripped company, left only with liabilities to its creditors without any assets or revenue to pay them, is then wound up in insolvency with the result that the rights of creditors, having no recourse to the assets moved to the new entity, are defeated.

Various and creative ways have been employed to give effect to these phoenixing schemes which often involve true management and control of phoenixed entities being placed in the hands of “shadow” officers and directors: i.e. individuals other than those officially appointed to such roles who exercise effective control of the phoenixed company “in the shadows”. Such an arrangement constitutes classic phoenixing where the power-brokers of the wound-up entity and the new entity are substantially the same.

Phoenixing has a substantial impact on Australia’s economy, estimated to cost Australia’s corporate creditors, including the Tax Office, more than $5 billion annually. The measures enacted to try and stem the tide of illegal phoenixing include:

  1. civil and criminal penalties, including substantial fines and jail terms of up to 10 years, for those who engage in or facilitate such activities;
  2. empowering ASIC, liquidators and company creditors to take certain legal action against those involved in phoenixing activities;
  3. entitling a company that has become insolvent as a result of, or in circumstances of, phoenixing, to recover assets of which it has been unlawfully divested, and/or their monetary value, from the persons or entities that have acquired those assets for less than either their “market value” or “best price reasonably obtainable”;
  4. in the alternative, where the divested assets have been sold to a third party purchaser without notice of any phoenixing activity, entitling the insolvent company to be compensated for the amount of value lost as a result of the divestment from those that did the divesting; and
  5. allowing for withholding of tax refunds, including GST credits, to be withheld in certain circumstances related to phoenixing.

Concerns have been expressed about the new legislation’s potential to interfere with lawful corporate restructuring arrangements. However, there would in our view seem to be sufficient provision for courts to intervene where necessary to open the way for legitimate restructuring, even where it might involve the actual or apparent movement of assets from a company in distress to related persons or entities for less than what may, on the available evidence, be regarded as its market value or “best price reasonably obtainable”.

Of course, one seeking to justify activity that might otherwise legitimately raise suspicions  of phoenixing would need sufficient records and documentation regarding its restructuring efforts. But proper record-keeping is in any event a fundamental part of the duties of all company officers such that the need to rely on a well-kept paper trail should, it is suggested, be of little concern to responsible officers.

Provisions that empower ASIC to make findings of fact as to suspected phoenixing conduct and impose penalties based on those findings without involving the courts could potentially invite challenge on constitutional grounds.

How can we assist?

Every business and enterprise face commercial stress and difficulty when outstanding bills cannot be, or are not, paid. Our insolvency, restructuring and debt recovery team are skilled and experienced in advising insolvency practitioners, as well as directors and companies, in all aspects of insolvency law, and provide independent, practical advice on all issues.  We provide real expertise and experience to manage the process and help guide you through the other side. Contact us today should you require advice or representation in this area. 

*This is general information only, and does not constitute specific legal advice. Please consult one of our experienced Legal Team for specific advice relevant to your situation.

Supporting Western Australians for more than 100 years

"Always fast and thorough service. Thank you"

Sitka Pil

"My circumstances at the time I made contact with HHG were dire following my argument being rejected by two no win no fee firms. Following my initial meeting with HHG's employment law team I was left feeling extremely positive by the response and concern shown by HHG in regards to their support of my argument along with their preparedness to pursue an outcome on my behalf.

I accept the fact that nobody really wins in these cases (mental health/ workplace) however the end result was what would be considered most favourable and far in excess of what would have been achieved had I not sought the advice from HHG.

I have no hesitation in recommending HHG to anyone caught up in the messy circumstances I found myself in at the time.

Great advice and five-star commitment to their client!!"

Nathan Lynch

"Thank you for such great assistance with the transaction of Flying Domestics on behalf of Lorna Good. It has been such a pleasure to work with the HHG Legal Group and I look forward to working with you in the future."

Jim Goodwin

"Simon Creek and his team were at all times empathic, professional and confident.  My matter needed to be addressed within a pressing time frame, and their availability at short notice and contact after hours was much appreciated.  It caused me considerable stress, but having such a thoroughly reliable and competent team to call on helped me to feel in control. Although I hope not to need their services again in future, I would be confident in doing so!"

Dr Lana Bell

"A good outcome is what we can expect.  A great outcome is a sign of a company which does the very best for their clients. A very big thank you to Daniel Morris for showing empathy towards my small and much needed legal action.

To HHG Legal Group, thank you for a great outcome.  I would recommend your company to anyone seeking legal services."

Jan Atkinson

"Your support this morning was amazingly kind, not to mention your totally reassuring competence, knowledge and wisdom that you used on my behalf.  It was extremely reassuring to have your knowledgeable support, and I particularly appreciated your real and obvious kindness to me. It means so much at a very difficult time. I'm so grateful to you."

Family Law Client

"Janene was very professional and we established a good rapport quickly. The subject of death and wills can be quite confronting to deal with, however, Janene's approach was soft and accommodating."

Lynette Livesey

"A big thank you to HHG for their professional service, continued support, and wide range of legal knowledge. Our clients have given us nothing but kind words regarding HHG Legal Group and so we have no hesitation in referring and recommending Simon Creek and HHG Legal Group for their outstanding services and legal expertise."

Nigel Plowman, Director at Mckinley Plowman & Associates

"Simon is a friendly and practical legal advisor. I have received great feedback from the clients I have referred to him and his team at HHG Legal Group."

Richard Beal, Director at BDO

"Over the last few years, I have been impressed by Simon’s legal ability, management skills, entrepreneurial spirit, personal integrity and people skills. He appears to be that rare breed of lawyer – both knowledgeable and commercial."

Michael Malone, Founder of iiNet

"Our family has been a client of HHG Legal Group over many years.  Business has included drawing up of wills for three generations and preparing of probate for my father in law. I would have no hesitation in recommending HHG Legal Group to anyone requiring such services."

Bernice Climie

"You should be congratulated for the manner in which your staff address clients and we found our dealings with your company, once again a very pleasant experience and we would like to truly thank you for your efforts."

Steve Harvey and Jane Powell

"HHG Legal were absolutely fantastic. Extremely responsive and brought calm to our chaotic family situation through their knowledge and caring attitude. Extremely professional from our very first contact with them and they expertly guided our family though the required legal process over almost a 12 month period."

Amanda Williamson

"Fantastic team! They really care about their client. Tim Colcutt is a 'go that extra mile' guy who gives his client his all. I can't recommend HHG and Tim enough."

Kerry Samson

"I had a fantastic lawyer in Matthew Lilly. He helped me out a great deal with good, sound advice in a friendly, professional manner. First class, thanks Matthew"

Graeme Hammond

"Marine Plant Systems has been working with HHG Legal Group for a few years now and they continually provide first-class service. Their professional advice has been invaluable to our company."

Carolin Grimm - Marine Plant Systems

"We were kept up to date at all times. Pricing was always updated over the time period so we remained "in budget". Personal access to someone whenever I had questions. All in all a great experience without too much fuss."

Rosslyn Tasker - COO Altusq Pty Ltd

"Good service you can count on."

Miles Lee

"HHG Legal Group has provided outstanding support as I have taken the journey of buying a business, their professionalism is beyond reproach. Their assistance throughout the Due Diligence process has been invaluable, I would fully recommend them."

Mark Armitage

"Very friendly and efficient service - what a pleasure working with Matthew."

Jacques Taylor

"I highly recommend Daniel from HHG Lawyer in Mandurah. When dealing with a complicated legal property matter recently I was extremely impressed by Daniel's honesty and integrity and the legal advice I received. I am very happy with the service from HHG Legal."

Tony Walker

"Lisa, thank you so much for representing me in court, honestly, I would not have had the outcome I got without you. Once again, Thank you so much."


"Matthew Lilly was excellent in processing our project. He achieved the excellent result that we required on our project.

We would give Matthew a 5 star rating.

We will definitely commission Matthew for any further projects if we have the need."


"I have had the pleasure of being represented by Ms Lisa Riley. Lisa helped me in December 2020 when I was charged. Lisa was extremely supportive, reassuring, and preserved with her investigation of the laws and was able to save me from a terrible outcome. Another incident occurred in August 2021 in which I sought Lisa’s help. Lisa preserved and was very patient with me. This only got resolved this year. When she advised me that she was leaving her old firm, I insisted that she remain my lawyer, as I had the utmost faith in her. Hence I moved over to HHG. Lisa took no shortcuts in my defence and continued to preserve for the toxicology report that ultimately saved me. She kept me up-to-date with the progress and provided support. Having someone as understanding as Lisa was a huge gift, to me and my family. You have gained a huge asset in Lisa joining your firm.

Thank you, Lisa, forever grateful for your work, and if ever needed, I will be sure to refer to you"


"We can highly recommend HHG Legal Group and particularly Mr Blair Campbell (Special Counsel / Dispute Resolution)

Blair worked with us as we navigated a very difficult third party dispute.

Blair’s expertise, wisdom, and the way he guided us in a very measured and calm manner gave us great encouragement and comfort. Blair helped us to focus on what we needed to and to trust the process.

Blair was always responsive to us, he always got back to us very promptly to answer our questions and to help us to step through some really hard days.

We are very grateful for Blair’s expertise and wisdom along with his empathy and care, this truly made the difference for us."

Wayne and Janice Belcher

Preferred office location:

Please select your nearest office location so we can show you the most relevant information.