Written by Condon Associates on 23 July 2010

The old chestnut ‘Phoenix Activity’ is back in the press again.

Recently we have seen an increase in media reporting about changes that are to be made to the laws dealing with alleged phoenix activity by Australian directors. At the same time we see issues being raised about how legislation in this country acts as a constraint on a company’s ability to manage its way out of difficulty due to the imposition of rules and liabilities relating to trading whilst insolvent. Clearly the functional issues are at odds. You are damned if you do and damned if you don’t.

We currently have an insolvency enquiry underway that is looking at the operation of the profession. Hopefully once this is over there will be both an interest and a willingness to truly focus on the laws as they relate to the management of companies and businesses that are in some state of financial distress, laws that will focus on the preservation of value, protection of those that are genuinely endeavouring to do the right thing and a far more efficient, cost effective and equitable way of dealing with those that are simply out to ‘rip people off’.

It is only with a genuine focus on creating a process and a system that will function both economically and effectively with a focus on the 21st century rather than a Dickensian debtor’s prison. And be able to achieve this regardless of who is running the show, but more on that next time.