Phoenix companies and solicitors’ duties

This article provides commentary on the Supreme Court of New South Wales judgment ofASIC v Somerville & Ors. The proceedings relate to allegations against several unrelated company directors and their solicitor for their involvement in ‘phoenix’ trading. Phoenix trading is a form of asset stripping by which directors transfer assets from an insolvent or near insolvent company to a new company, with the intention of keeping the assets out of the reach of creditors. The decision is significant as this is the first time ASIC has successfully initiated an action against a solicitor for the facilitation of illegal phoenix activities.

Significant cases, legislation or articles referred to

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