Illegal vs legal phoenix
Starting again isn't illegal. Moving assets to avoid creditors is.
What is a 'phoenix'?
'Phoenixing' describes a business that continues through a new company after the old one fails. On its own, that is not unlawful — directors are allowed to start again, and a genuine business rescue can preserve jobs and value.
When it becomes illegal
Illegal phoenix activity is where assets are deliberately moved from a company to another entity to avoid paying creditors, tax or employees — typically for less than market value. The law includes 'creditor-defeating disposition' provisions aimed at this conduct, and ASIC and the ATO actively pursue it.
If you are considering a new structure, get advice first. Paying fair value, documenting the transaction and being transparent are essential.
General information only — not legal or financial advice. Any figures or time limits are indicative and can change. Every situation is different; speak with us about yours.