A phoenix company, as defined by the Companies Act, 1993 is a company which any time before or up to 5 years after the commencement of liquidation proceedings is known by a name which is:
- A pre-liquidation name of the failed company; or
- A similar name.
A pre-liquidation name is any name of a failed company used in the 12 months prior to the commencement of the failed company’s liquidation. It is important to note that a pre-liquidation name can include a trading name as well as a registered company name.
A narrow range of exceptions may apply to the application of phoenix company provisions:
- Where those persons whose actions would breach of the phoenix company provisions seek and obtain the leave of the Court in relation to such actions;
- Where a person is named in a successor company notice, being a notice sent to creditors by a company that acquires the business of a failed company as arrangements made by a liquidator, receiver or pursuant to a deed of company arrangement;
- For temporary periods where a person has applied for exemption from the Court;
- Where the phoenix company has been known by the same or similar name for at least 12 months prior to liquidation of the failed company and has not been dormant during that time.
Breaching phoenix company provisions is no minor matter. Penalties are among the harshest under the Act, can be a term of imprisonment of up to 5 years or a fine not exceeding $200,000. In addition, a person who commits one of these offences may be held personally liable for any debts incurred by the phoenix company.