Queenslander Sheila Anne McAulay pleaded guilty in the Brisbane Magistrates Court to one count of breaching director’s duties in relation to the operation of a franchise.
Ms McAulay’s company, Greenlay Enterprises, was found to have engaged in illegal phoenix activity by “selling” assets to another company of which she was also a director – Pasta on the Run – for $20,000.
However, the $20,000 was never paid, meaning there was no money or assets for Greenlay to pay creditors once it was placed into liquidation in July 2013.
She was placed on a two-year good behaviour bond.
Meanwhile Victoria man James Meaden was fined $5,000 and disqualified from managing a business for five years for similarly stripping assets from a failing business into another company of which he as the sole director.
According to ASIC, Mr Meaden transferred $34,800 from Brimarco to Tough As, the day before a court hearing to wind up Brimarco in 2015.
In addition to Brimarco creditors being left out of pocket by more than $2 million, the transfer also meant that employee wages and entitlements went unpaid.
In September, the federal government announced a long-awaited crackdown on phoenix activity, which then Minister for Revenue and Financial Services Kelly O’Dwyer said: “hurts all Australians, including employees, creditors, competing businesses and taxpayers”.
That announcement came with the proposal to instigate a new director identification system. SMEs baulked at the idea amid fears of an increased red tape burden.