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Australian director banned for phoenix activity

Publication: 
Editorial Staff
chiefofficersnet

Hayley Joan Street of Richmond, Victoria has been disqualified from managing corporations for four years following her involvement in two failed companies.

According to the Australian Securities and Investment Commission which regulated both public and private companies, Street not only failed in her duties as a director but caused the transfer of assets from a failing company to another with which she continued the business.

Street was a director of two companies from 2010 to 2019:

* Steven & Joan Pty Ltd (ACN 118 428 916) (S&J) that operated in the construction industry (liquidator appointed 22/02/2019); and
* Tutti Famiglia #1 Pty Ltd (ACN 146 217 254) (Tutti Famiglia) that operated in the accommodation and food services industry (liquidator appointed 28/03/2019).

In making its decision, ASIC found that Street:

* failed to exercise her duties as a director of S&J with due care and diligence;
* improperly used her position as a director of S&J to gain an advantage for herself or someone else, or caused detriment to S&J by:
* allowing S&J to enter into a sale agreement with a related entity, Federation Solid Plastering Pty Ltd (ACN 631 183 296) (Federation Solid) to transfer the assets and business of S&J for AUD6,806.31 - an amount that Federation Solid subsequently did not pay. Once the assets and business were transferred, Federation Solid continued to operate a substantially similar business to S&J. This conduct is commonly known as illegal phoenix activity;
* allowing S&J to obtain loans totalling $552,000 knowing the company was in financial distress and unlikely to be in a position to repay the money; and
* authorising transactions from S&J’s bank account for purposes that appear to be personal in nature;
* failing to ensure that S&J maintained adequate books and records;
* failing to assist the liquidators of S&J and Tutti Famiglia; and
* failing to prevent S&J from incurring debts totalling approximately AUD618,000 when the company was most likely insolvent.

The companies had a combined total debt exceeding AUD1 million owed to creditors.

In disqualifying Street, ASIC relied on reports lodged by the liquidator of S&J, Brent Leigh Morgan of Rodgers Reidy and the liquidator of Tutti Famiglia, Adam Bernard Preiner of O’Brien Palmer. ASIC assisted the liquidator of S&J in preparing a supplementary report by providing funding from the Assetless Administration Fund.

Street is disqualified from managing corporations until 14 December 2024.

ASIC is a member of the Phoenix Taskforce, which comprises federal, state and territory government agencies who collaborate to combat illegal phoenix activity. The aim of the Phoenix Taskforce is to provide a whole-of-government approach to identify, disrupt and prosecute those who engage in or facilitate illegal phoenix activity.

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