BULAW5915 Corporate Law | Phoenix Activity in Australia
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Federation University Australia
BULAW5915 Corporate Law (BULAW5915)
Added on 2019-11-14
BULAW5915 Corporate Law | Phoenix Activity in Australia
Federation University Australia
BULAW5915 Corporate Law (BULAW5915)
Added on 2019-11-14
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Running head: PHOENIX ACTIVITY IN AUSTRALIAPhoenix Activity in AustraliaName of the University:Name of the Student:Authors Note:
1PHOENIX ACTIVITY IN AUSTRALIATable of ContentsPart A...................................................................................................................................2Question 1........................................................................................................................2Question 2........................................................................................................................2Question 3........................................................................................................................3Question 4........................................................................................................................4Question 5........................................................................................................................5Question 6........................................................................................................................6Question 7........................................................................................................................7Part B...................................................................................................................................8Question 8........................................................................................................................8Question 9......................................................................................................................10References..........................................................................................................................13
2PHOENIX ACTIVITY IN AUSTRALIAPart AQuestion 1 Phoenix activity can be defined as “certain evaluation of tax along with differentliabilities that includes employee entitlements by means of deliberate, systematic along withcyclic liquidation of certain corporate trading companies”. Illicit phoenix movement includes thepurposeful transfer of assets from an obliged organization to another organization to abstain frompaying creditors, tax or worker entitlements (Abdennabi et al., 2016). The directors leave theobligations with the old organization, regularly putting that organization into organization orliquidation, leaving no assets for pay creditors. In the mean time, another organization,frequently worked by similar directors and in an indistinguishable industry from the oldorganization, proceeds with the business under another structure. By participating in this illicitpractice, the executives abstain from paying obligations that are owed to creditors, employeesand statutory bodies (e.g. the ATO). Illicit phoenix movement is a genuine wrongdoing and maybring about organization officers (executives and secretaries) being detained (Ahmad et al.,2013). Question 2Phoenix movement can offer certain benefits to the society as it is characterized as "theevation of expense and different liabilities, for example, employee privileges, through thedeliberate, efficient and now and then cyclic liquidation of related corporate exchanging entities"(Al-Fredan, 2013).Phoenix movement, or "phoenixing", encourages the process of being in least complexshape, exchanging the assets of an obligated organization into another organization under the
3PHOENIX ACTIVITY IN AUSTRALIAcontrol of the same director(s). The director(s) at that point either puts the underlyingorganization into organization or liquidation (or abandons it to be ended up on the utilization of acreditor), in either case abandoning it without any advantages for addressing leaser claims (Al-Qurainy et al., 2017). It offers advantages to the new organization, then, proceeds with the matterof the first organization, free of the first organization's liabilities and with its benefits out of thescope of the banks of the first organization. This enables the business to proceed in operation while the first organization's creditorsare left to guarantee against the now-assetless original organization. Further, the liquidator of thefirst organization is left with no assets to explore or seek after cases against the director(s) of thefirst organization. Fradulant phoenix plans are beneficial for they are regularly more advanced,including a complex corporate structure, various substances holding distinctive parts andisolation of asset holding, creating liability and work procure companies (Anderson, 2016).Question 3Organization phoenix movement has the purpose of enrolling another organization totakeover (resurrection) the fizzled or indebted business of an antecedent organization. Phoenixmovement may not include unlawful (e.g. deceitful) conducts. Certified organization failure andliquidation (where a chief dependably deals with an organization and its business accordinglyproceeds after liquidation utilizing another organization), is an effective utilization of thecorporate form (Anderson et al., 2015). Unlawful (e.g. false) phoenix movement includes organization executives purposelyattempting to abstain from paying the organization's lenders. For instance, directors may run anorganization dependably in any case, regardless of this; the organization cannot pay its
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