17 December 2019
NSW construction companies collapse at levels not seen elsewhere in the country with more criminal misconduct allegations made against them than in other states. Administrators found evidence of wrongdoing in 561 construction industry businesses that failed in NSW in 2017-18, reflecting a pattern of “phoenixing” that is difficult to prosecute because it is not illegal in all cases.
Illegal “phoenixing” occurs when company directors move assets from one company to another to avoid debts or liability for issues like building defects leaving creditors with the bill when the company is liquidated.
It costs the economy up to $5 billion each year. Australian Restructuring Insolvency and Turnaround Association CEO John Winter said phoenixing has been “endemic” for decades. “It’s become a learned behaviour in the property market because it’s gone on for so long (and) because nobody has really been prosecuted to any great extent,” Mr Winter said.
The Sydney Morning Herald
Nigel Gladstone and Carrie Fellner