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Joe sought advice from his accountant, Trevor, who said he needed to take urgent steps to stop the company collapsing.Trevor introduced Joe to Carlos, a pre-insolvency adviser who offered to restructure the business for ,000.Carlos advised Joe to change the name of Sample Homes to its Australian Company Number and to register a new company called Sample Homes (Vic) Pty Ltd.He told Joe that registering a company that had a very similar name would not alert the building industry that there had been a change.
His costs had blown out on major projects and he was unable to pay his suppliers, contractors, employees, loans and taxes.
Where a director has responsibly managed a company and it subsequently fails, they can operate the same business using another company without engaging in illegal phoenix activity.
A responsibly managed company means the director has complied with their legal obligations and acted in the best interest of the company and its creditors.
For example, if plant and equipment was independently valued and sold for 0,000 to another company, neither the old company or its creditors would be disadvantaged because they would have 0,000 in lieu of the plant and equipment.
The key difference between a legitimate phoenix business rescue and illegal phoenix activity is the director’s dishonest intentions.