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  • Legitimate business bailout or risky phoenixing?

    In today's challenging economic conditions some of your business clients may seek advice on whether to pause, change or permanently close their business.

    While the vast majority of advisers do the right thing, some untrustworthy or unqualified advisers may offer inappropriate pre-insolvency advice to your clients. This advice may include illegal phoenix activity, and recommendations to remove your client's assets before closing their business, for use in a copy of the original business.

    Warn your clients to check they're seeking or receiving advice from qualified professionals, such as an accountant, lawyer, registered liquidator or registered trustee. Remind them to be wary of some of the common red flags of untrustworthy advisers, including:

    • cold calling with offers of advice
    • unsolicited correspondence after court action by a creditor
    • advice to transfer assets to a third party without payment
    • refusal to provide advice in writing
    • suggestions they have a sympathetic liquidator who will protect your client's personal interests/assets
    • advising that certain records be withheld from the bankruptcy trustee or liquidator
    • suggestions they deal with the liquidator/trustee on your client's behalf.

    If your client needs to wind up their company, refer them to a registered liquidator or registered trustee.

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    Last modified: 16 Nov 2020QC 64185