Illegal Phoenixing in the Qld Building Industry

24th July, 2019

Illegal Phoenixing in the Qld Building Industry

You may be aware that the Federal Government is planning to reform corporations law to combat illegal company phoenixing. However, if you are a building contractor in Queensland, you are already subject to the provisions of the Qld Building & Construction Commission Act (QBCC Act) which restrict corporate phoenixing.

Excluded Individual

In Qld a person becomes an “excluded individual” under the QBCC Act if they:

  1. are a director, secretary or influential person for a building company within the period of 2 years before the company enters insolvency; or
  2. become bankrupt personally.

3 Year Industry Exclusion

An excluded individual cannot hold a QBCC licence personally or be a director, secretary or influential person for a QBCC-licensed company for 3 years from the date of the relevant insolvency event.

Permanently Excluded Individual

If you are unfortunate enough to be involved in 2 separate insolvency events, you will face permanent exclusion from the Queensland building industry, at least to the extent you or your contracting entity needs a QBCC licence to operate.

Influential Persons Caught

Importantly, as mentioned, the illegal phoenixing provisions extend to “influential persons” within a company.  An influential person is an individual other than a director/secretary who is in a position to control or substantially influence the company’s conduct. Broadly, an influential person can include a:

A professional advisor (unless an employee of the company) is not an influential person.

Queensland contractors need to be very conscious of the above consequences before taking decisions to restructure or liquidate and, ideally, should seek legal advice.

Note: This information is not legal advice and is only provided for your general information. If you require advice specific to your circumstances, please let me know.

 

If you have any questions or if we can be of assistance with any of the above, please contact Frank Nardone or Tony Scoglio on 07 3833 2100 or info@scogliolaw.com.au.