The Rudd government appears to be changing its tune, when the Minister for Corporate Law, Chris Bowen, released a set of proposals to reform insolvency law to give company directors more protection from distressed companies and enhance the chances of company survival. The government seems intent to attach the problem of “phoenix companies”. Phoenix companies refer to the practice of closing a company one day and, like the bird in Greek mythology, rising from the ashes and opening another company with the same assets and similar name to avoid paying taxes, wages and other bills with the sole purpose of cheating creditors out of their money. The problem, is that the new measures may create significantly more compliance issues than the eliminate, and may well serve to generally reduce the level of entrepreneurship.
The Sydney Morning Herald – Half-baked laws will stifle businesses