Source: AVAA
The first decision under recent Anti-Phoenixing Laws has been handed down. Victorian Supreme Court Associate Justice Gardiner observed that the case had “all the classic hallmarks of a phoenix transaction” before handing down his decision. It is his opinion that assets had been transferred below market value - or best available price at the time.
Introduced under the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 and taking effect from 18 February 2020, liquidators have a pathway to recover assets disposed of by companies for less than market value in the 12 months prior to winding up. A Creditor Defeating Disposition, is a voidable transaction under this act. A Creditor Defeating Disposition is broadly defined as when the assets of a company are transferred for less than market value, or the best available price at the time of sale, to another entity. The obvious aim is to deny creditors access to these assets. Public auction is a sale avenue that can help defend companies against Creditor Defeating Disposition claims.
From time to time members of the AVAA may be involved in the valuation or sale of items for company restructuring purposes - it is an increasing area of activity driven by the business turnaround sector. Members providing advice or agency services to this sector should be aware of their responsibilities under the act. Be aware of company directors who are "valuation shopping' or making significant unsupported claims that may influence the value of their assets. As the peak body for Auctioneers and Valuers, AVAA membership continues to be a benchmark in the wider industry - driven by the high standards of our practitioners and the dependable results that they achieve.
