The allegation was made by liquidators from Helm Advisory in documents filed with ASIC in April. The Merhis Group denied the allegations to the Herald. It settled claims from creditors in late September, agreeing to pay about $20 million to the tax office and other creditors involved in the collapse of more than half a dozen of their subsidiaries.
When a company is phoenixed there are few or no assets left to fund legal action against the directors. ASIC, generally, has less than 20 successful prosecutions against directors in a year, despite more than 7000 reports of misconduct, Mr Winter said.
If a company has no assets and liquidators want to take legal action to pursue directors for illegal phoenixing or other misdeeds they can apply to use ASIC’s Assetless Administration Fund. Most applications are rejected, with fewer than one in three of the 1524 requests made in 2016/17 and 2017/18 approved.
Introducing new laws targeting illegal phoenixing last month Assistant Treasurer Michael Sukkar pledged to add $8.7 million to the fund over four years.
Phoenixing is also fanned by “dodgy” pre-insolvency business advisors who tell directors how to…