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Phoenix activity and improper behaviour involving multiple company failures results in five year disqualifications for two directors.
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Directors cop maximum ban for failed companies with $8.5m debt
21 March 2023
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The Australian Securities and Investments Commission (ASIC) has disqualified two former `directors for the maximum of five years each for involvement in phoenixing and multiple company failures with combined debts exceeding $8.5 million.
Roxanne Cornell of Kurunjang, Victoria, was a director of three failed construction companies between November 2015 and February 2020: Coconut Post Tensioning, Coconut Group and Petrox Nominees.
Coconut Post Tensioning provided concrete construction services while Coconut Group operated a steel reinforcement and fabrication company.
The three companies owed a combined total of $6,133,017 to creditors, including $2,682,204 to the ATO.
ASIC found that Ms Cornell acted improperly and failed to meet her obligations as director when she:
- Engaged in phoenix activity by continuing to transfer and operate the business in new entities to sustain a loss-making business and to avoid paying creditors.
- Authorised the purchase of Coconut Group, which appeared to be unprofitable, by Coconut Post Tensioning.
- Made payments to herself and third parties for an improper purpose to the detriment of Coconut Post Tensioning and Coconut Group.
- Obstructed the liquidators of Coconut Post Tensioning from obtaining the company books.
- Failed to respond to liquidator requests for information on Coconut Post Tensioning.
- Failed to prevent Coconut Post Tensioning and Coconut Group from trading while insolvent.
In disqualifying Ms Cornell, ASIC relied on supplementary reports lodged by the liquidator of Coconut Post Tensioning and the liquidator of Coconut Group, Blair Pleash of Hall Chadwick.
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Ms Cornell is disqualified from managing corporations until 24 February 2028.
ASIC has also disqualified James (Jim) Soong of Concord, NSW, from managing corporations for five years for his involvement in two failed companies between February 2020 and January 2022.
The two companies, Span Form and F.W. Resources, were both involved in the construction industry and wound up owing a total of $2,372,629 to unsecured creditors, including $1,579,888 to the ATO.
ASIC found that Mr Soong failed to:
- Meet statutory lodgement requirements with the ATO.
- Pay statutory entitlements to ATO and state agencies for payroll tax and workers’ compensation insurance.
- Keep proper financial records.
In disqualifying Mr Soong, ASIC relied upon supplementary reports lodged by Span Form’s liquidator, Darren Vardy of SV Partners, and F.W. Resources’ liquidator, Lee Crosthwaite of Worrells.
Mr Soong is disqualified from managing corporations until 27 February 2028.
Both former directors have the right to seek a review of the decision by the AAT.
Section 206F of the Corporations Act 2001 allows ASIC to disqualify a person from managing corporations for a maximum period of five years if, within a seven year period, the person was an officer of two or more companies, and those companies were wound up and a liquidator provides a report to ASIC about each of the company’s inability to pay its debts.
ASIC maintains a banned and disqualified persons register that provides information about people who have been disqualified from involvement in the management of a corporation.
ASIC is also a member of the Phoenix Taskforce, which comprises federal, state and territory government agencies who collaborate to combat illegal phoenix activity.
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