26 September 2023

VBA swooping on dodgy phoenix builders

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Building companies who go bust to avoid paying debts are being put on notice by the Victorian Building Authority (VBA), working as part of a national taskforce to crack down on illegal phoenix activity.

Executive Director, Regulatory Operations at VBA, David Brockman said the Australian Taxation Office (ATO) was leading Phoenix Taskforce which was established in 2014 and brought together Federal, State and Territory Agencies to detect and disrupt businesses engaging in the illegal phoenix actions.

Mr Brockman said people with ties to a company which had entered external administration have faced greater scrutiny since the VBA had its powers strengthened in 2020.

“We have a role in ensuring practitioners understand how to do things correctly, and in discouraging risky, harmful behaviour in the building industry such as illegal phoenixing,” Mr Brockman said.

“If you think you can avoid the scrutiny of regulators by simply liquidating your company, moving assets and then seeking re-registration, think again,” he said.

“The VBA runs a series of credit history and background checks using internal and external data when practitioners who have entered into external administration apply for registration or renewal.”

Mr Brockman said the extra scrutiny meant that the corporate activity of building practitioners who’d served in influential positions in companies that entered external administration could be refused registration or renewal.

He said the VBA could also issue the practitioners with a ‘show cause notice’, requiring them to justify why they should be granted further registration.

“The VBA has denied 15 registrations or registration renewals since July 2020 as part of its work preventing illegal phoenixing activity,” the Executive Director said.

“Among those stopped were domestic builders, commercial builders, commercial building companies, domestic building companies and draftspersons.”

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