Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 (6 of 2020)

Schedule 1   Phoenixing offences and other rules about property transfers to defeat creditors

Part 1   Main amendments of the Corporations Act 2001

Corporations Act 2001

25   After section 588FG

Insert:

Subdivision D - ASIC orders about certain voidable transactions

588FGAA ASIC may order undoing of effect of creditor-defeating dispositions by company being wound up

Scope of this section

(1) This section applies if:

(a) a company for which a liquidator has been appointed has made a creditor-defeating disposition of property; and

(b) the disposition is voidable under subsection 588FE(6B); and

(c) a person has received any money or property as a direct or indirect result of:

(i) the disposition; or

(ii) the person's acquisition of the property after the disposition.

Note: The person may receive money or property as an indirect result of acquiring (by the creditor-defeating disposition or a later transaction) the property of the company that was the subject of the creditor-defeating disposition, and later disposing of that property and receiving money or property as consideration for the later disposal.

Liquidator may request order

(2) The company's liquidator may request ASIC to make an order under subsection (3). The request may be made only during the period beginning on the relation-back day and ending on the later of:

(a) 3 years after the relation-back day; and

(b) 12 months after the first appointment of a liquidator in relation to the winding up of the company.

ASIC must decide whether to grant the request.

Orders by ASIC

(3) ASIC may, on request under subsection (2) or on its own initiative, make one or more of the following orders in writing given to the person:

(a) an order directing the person to transfer to the company property that was the subject of the disposition;

(b) an order requiring the person to pay to the company an amount that, in ASIC's opinion, fairly represents some or all of the benefits that the person has received (directly or indirectly) because of the disposition;

(c) an order requiring the person to transfer to the company property that, in ASIC's opinion, fairly represents the application of proceeds of property that was the subject of the disposition.

Note 1: Subsection (5) sets out matters ASIC must consider in deciding whether to make an order.

Note 2: Section 588FGAB provides further for the content of orders.

Limit on power to make orders

(4) However, ASIC must not make an order under subsection (3) if ASIC has reason to believe that, if it were a court, section 588FG would prevent it from making a corresponding order under section 588FF.

Considerations in deciding whether to make orders

(5) In deciding whether to make an order under subsection (3), ASIC must have regard to the following:

(a) the conduct of the company and its officers;

(b) the conduct of the person;

(c) the circumstances, nature and terms of the disposition;

(d) the relationship (if any) between the company and the person;

(e) any other matter ASIC considers relevant.

Revocation and amendment of orders

(6) At any time, ASIC may, in writing given to the person, revoke or amend an order under subsection (3).

Note: A court may also set aside an order made under subsection (3) of this section: see section 588FGAE.

588FGAB Content and copies of orders

Reasons

(1) An order under subsection 588FGAA(3) must include written reasons for the making of the order (including why ASIC is satisfied section 588FGAA applies).

Orders for payment

(2) An order under paragraph 588FGAA(3)(b) (requiring a person to pay a company an amount) may require the amount to be paid at a time or within a period set out in the order.

Liquidator to be given copies of orders etc.

(3) If ASIC makes an order under subsection 588FGAA(3) relating to a company, ASIC must give the company's liquidator a copy of the order, and of any revocation or amendment of the order.

588FGAC Compliance with orders generally

A person must not engage in conduct if the conduct contravenes an order under subsection 588FGAA(3).

Note: Failure to comply with this section is an offence: see subsection 1311(1).

588FGAD Compliance with orders for payment

Enforcement of order for payment generally

(1) An amount payable by a person to a company under an order made under paragraph 588FGAA(3)(b) is recoverable by the company as a debt by action against the person in a court of competent jurisdiction.

Court order for payment if person convicted of offence

(2) If a court convicts a person of an offence based on section 588FGAC relating to a contravention by the person or someone else of an order made under paragraph 588FGAA(3)(b), the court may (in addition to imposing a penalty on the person for the offence) order the person to pay the company an amount not exceeding the amount involved in the contravention.

Complying with order for payment by transferring property

(3) A person ordered under paragraph 588FGAA(3)(b) to pay a company the value of any property may comply with the order by transferring the property to the company.

588FGAE Court may set aside order by ASIC

(1) The person subject to an order under subsection 588FGAA(3) or any other person interested in such an order may apply to a Court within the period described in subsection (2) to have the order set aside.

(2) The period is 60 days after the day the applicant was given the order or otherwise became aware of it.

(3) The Court may set the order aside if satisfied, on the basis of the written reasons for the order, that section 588FGAA did not apply.

(4) If the order is set aside, it is taken never to have been made.

Subdivision E - Various rules about voidable transactions