Definition

Phoenix company (Ro.: societate comercială rezultată din procedura de insolvență a unei alte companii – similar reorganizării, Cz.: společnost založená ze společnosti v úpadku(See also: sale of assets, transactions at undervalue, insolvent trading, fraudulent trading, pre pack liquidation, liquidation, administration) =  a company that is formed on the basis of the insolvency of another company. 

The term is common-law specific and it does not have a legal basis. Doctrinarians came up with it, although there is plenty of legislation regarding the concept.

To be legal, a phoenix company has to abide to the following rules:

-the new company should buy the assets of the old company at the best possible price on the market

-the interests of the creditors should be highly regarded in the period prior to the liquidation of the old company

-the new company should not have the same or a very similar name to the old one

 

Useful links

Legislation 

http://www.comlaw.gov.au/Details/C2012A00048 - The Corporations Amendment (Phoenixing and Other Measures) Act 2012, Australia

http://www.legislation.govt.nz/act/public/1993/0105/latest/DLM323263.html – Companies Act 1993, New Zealand

http://webarchive.nationalarchives.gov.uk/+/http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/legislation/uk/insolvencyrules.pdf - The Insolvency Rules 198, UK

Case law

http://www.chapmantripp.com/publications/Documents/2012%20Groves%20v%20TSSN%20%28in%20liq%29.pdf - Grove v TSSN Ltd (in liq) [2012] HC 2402 

Publications

http://www.dissolve.com.au/information-centre/advice-to-directors/phoenix-company/ - What is a phoenix company?

http://moneyinbusiness.com.au/why-are-phoenix-companies-so-hard-to-define/ -  Geoffrey McDonald, Why are phoenix companies so hard to define?, October 2013

http://www.inderlynch.co.nz/articles/commercial-law/november-2009-phoenix-companies.php - Phoenix Companies, November 2009

http://www.publications.parliament.uk/pa/cm200809/cmselect/cmberr/198/19806.htm - The Insolvency Service - Business and Enterprise Committee Contents 

Online publications

http://books.google.ro/books?id=LQflMqcZyOoC&pg=PA92&dq=phoenix+company&hl=ro&sa=X&ei=ghvqUoiIIIfc4QS3t4HIBg&redir_esc=y#v=onepage&q=phoenix%20company&f=false – Davies P.L., 2010, Introduction to Company Law, Oxford University Press, pages 92-93

http://books.google.ro/books?id=4B2PAgAAQBAJ&pg=PT457&dq=phoenix+company&hl=ro&sa=X&ei=ghvqUoiIIIfc4QS3t4HIBg&redir_esc=y#v=onepage&q=phoenix%20company&f=false – De Lacy J., 2013, Reform of UK Company Law, Routlege

http://books.google.ro/books?id=9w38wLzFeHIC&pg=PA89&dq=phoenix+company&hl=ro&sa=X&ei=WBvqUvrBDqix4wS2iYDYCQ&redir_esc=y#v=onepage&q=phoenix%20company&f=false - Great Britain: Parliament: House of Commons: Business, Innovation and Skills Committee, Bailey A, 2013, The Insolvency Service: Sixth Report of Session 2012-13, Report, Together with Formal Minutes, Oral and Written Evidence, Volume 675 of HC (Series) (Great Britain. Parliament. House of Commons), The Stationery Office, pages 89-90

 

By Bianca Alexandra Prunea