The Victorian Building Authority (VBA) has been granted new powers, with greater scope to scrutinise a building practitioner’s corporate ties for evidence of illegal phoenixing.
The Authority said building practitioners with ties to a company that had entered external administration would have their involvement assessed through a series of credit history and background checks when they applied for registration or renewal.
“This scrutiny will protect consumers from practitioners who deliberately structure their company’s finances to avoid paying creditors, or those who have a history of ethical misconduct,” the VBA said.
“Illegal phoenixing occurs when someone deliberately liquidates a company and creates a new one to avoid paying debts or future liabilities,” it said.
“In the building industry, this places creditors, employees and clients at risk of financial loss, incomplete projects or an inability to claim damages from a practitioner for defective building work.”
The VBA said the extra scrutiny meant the corporate activity of building practitioners who’d served as directors, secretaries or influential persons of companies that had entered external administration could influence that practitioner’s suitability for registration or renewal.
Executive Director of Service Delivery at VBA, Suzy Neilan said the expanded powers gave the Authority greater scope to stop building practitioners involved in illegal phoenixing from entering or remaining in the industry.
“Building practitioners who put profits ahead of ethical behaviour won’t be able to hide behind a new company,” Ms Neilan said.