Protecting yourself from insolvency

The Fair Work Ombudsman has been taking an increasing interest in the area of advisor liability and illegal phoenix activity. Illegal phoenix activity refers to the transferring of assets from a company nearing insolvency to a new company to protect those assets from creditors when the company goes into liquidation.

This focus by the ombudsman comes on the back of a report in 2012 indicating that between $191,253,476 and $655,202,019 in employee entitlements were being lost annually. An employee entitlement is generally pay, super contributions or leave loading that has not been paid to the employee yet.

Where professional advisors become involved in illegal phoenix activity the Ombudsman has demonstrated a heightened appetite for prosecuting them under accessorial liability provisions in the Fair Work Act. Consequently when insolvency is looming it is imperative for company executives to seek legal advice not only in regards to their activities as company officers but also regarding the activities of their advisors.

If you have further questions, please contact us at frank@franklaw.com.au.

This is not legal advice.