Printing industry fires up over phoenix frauds

Rise of phoenix activity in the printing industry sparks a call for action.

Printing companies and suppliers have been unwitting victims and suffered severe financial loss as a result of such activities during the past few years, accoring to Printing Industries, which is calling on the Federal Government to take action to curtail such operations.

Printing Industries national manager for policy and government affairs, Hagop Tchamkertenian, said the current inquiry into fraudulent phoenix activity offered an opportunity for the industry to provide useful insights and feedback.

"Industry members who fall victim to fraudulent phoenix activity often fail to recoup funds owing to them as they are treated as unsecured creditors," he said.

"In recent examples suppliers of paper and other printing industry consumables as well as printing companies have been offered as little as 5 cents in the dollar by appointed administrators for the outstanding debts of liquidated companies."

According to Hagop, Australia-wide the annual cost to the economy of phoenix-related activities was estimated at more than $3.3 billion. "Fraudulent phoenix activities are not only criminal in nature but they also promote uncompetitive practices. Companies engaged in such activities by avoiding their taxes, statutory obligations and other obligations assume a certain cost advantage and have the potential of hurting law abiding businesses," he said.

"Accumulating debts with no desire to ever pay them out is certainly dishonest but is also un-Australian. Printing Industries hopes that its recommendations are considered and implemented by the Federal Government as a way of addressing this form of market failure.”

'Fraudulent' phoenix activity differs from normal instances of phoenix activity. It involves the evasion of tax and other liabilities through the deliberate, systematic and cyclic liquidation of related corporate entities.

'Normal' phoenix activity involves a genuine business failure involving a business that has been responsibly managed and subsequently continues using another corporate entity.