The last thing you need is for your business to do business with a “phoenix business”.
A “phoenix business” is a business secretly operated by people (the “key people”) who have been barred by ASIC or the Courts from being business owners or operators. Here are some suggestions:-
- If you are about to do a big deal with what you think is a long established business, but an ASIC search shows that the actual company was only recently incorporated, then it may be a phoenix business.
- Phoenix businesses often use the same premises, customer lists, email addresses, banks, websites, contact details and advertising material as an old, liquidated company. You won’t know who you are dealing with until you have checked the ASIC records.
- Your business is about to do a big deal with another business but you notice that there’s been a slight change to its name since you last dealt with it. The trademark and corporate colours have not changed. Without an ASIC search you won’t know who you are dealing with.
- If you think you know the key people in a business but an ASIC search turns up different names then you should do some further investigating.
- If ASIC searches show that the key people that you are about to deal with have had roles in a number of previous businesses, you need to do some more investigating.
- If ASIC searches seem to show the directors and shareholders are the spouse and children (or other relatives) of the person that you think owns the business, then they may be stool pigeons.
- If the key people have been in a liquidated business that have used the same liquidator then you need to ask questions because liquidators are most commonly appointed by creditors.
- If the key people have been in businesses that have been through “voluntary liquidations” then find out if they “threw themselves on their swords” to avoid debts.