Profiling Phoenix Activity: A New Taxonomy

Abstract

Phoenix activity occurs where the business of a failed company is transferred to a second company and the second company’s controllers are the same as the first company’s controllers. Phoenix activity can be both legal as well as illegal, however regulators face difficulties delineating between the two. To assist them with this process, the authors have prepared a detailed report on defining and profiling phoenix activity. This research note provides a brief summary of the report and profiles the characteristics of both legal and illegal phoenix activity. It identifies five categories of phoenix activity spanning the spectrum between a legitimate business rescue to complex illegal phoenix activity amounting to organised crime.

Keywords: Phoenix activity; insolvency