The company that owes you just changed its name. Now what?

The name changed but the director stayed

One warning sign of phoenix activity is that the company fails and cannot pay its debts, then changes its name to its Australian Company Number and a new company is registered, often with a similar name to the old company. You show up Monday morning and the sign has changed. Same yard, same trucks, same face at the gate. But your invoices carry the old name, and when you ring to chase payment, you are told that company no longer trades.

Phoenix activity occurs when a new company, for little or no value, continues the business of an existing company that has been liquidated or otherwise abandoned to avoid paying outstanding debts. Not every name change is a phoenix. Some are legitimate restructures. Your job is to protect your position while you work out which one you are facing.

Search ASIC by ACN, not by trading name

Find the ACN printed on your original invoices, quotes or contracts. That nine-digit number is permanent and follows the company even when the name changes. You can search by the organisation name, a registered business name they hold, or a unique identifier such as an ACN. Use the Organisation & Business Names search and search on the company's name.

Basic information about the company or organisation is available for free. This includes company or organisation name, type of company or organisation, ABN, ACN, ARBN or ARSN, registration date, next review date, the suburb, state and postcode of the registered office address and a list of documents lodged with ASIC. If the company name now displays only the ACN, that is a red flag. If the company status shows external administration or deregistered, your debt sits with a company that has stopped operating.

Source: Official guidance

Check the director's other companies and recent appointments

Write down the director's full name from the ASIC extract. Then run a second search, this time searching by the director's name under the professional registers or by purchasing a director profile extract. That search will list every current and recent company where that person holds or held a directorship. Look for companies registered in the days or weeks after your debtor changed its name.

The new company operates the same or similar business as the old company, sometimes from the same premises, using the same assets and employees. If you see a new company with a similar name, same address or same business description, and the director is common to both, you are looking at a possible phoenix structure. That pattern does not prove dishonesty, but it does require you to treat the new entity with caution.

Lodge proof of debt if the old company is in liquidation

If the ASIC search shows the old company is in liquidation, locate the liquidator's name and contact details on the company extract or from the list of lodged documents. If you have evidence that a company has transferred assets to another company, report your concerns to the liquidator in the first instance. Prepare a proof of debt form and attach copies of all invoices, delivery dockets, contracts and correspondence that prove the debt.

In your cover letter to the liquidator, describe what you observed: the name change, the new company, the same director, the same premises, the fact that you were told the old company no longer trades. Penalties exist for removing assets to hide them from creditors when a company is wound up. ASIC and liquidators also have additional powers to recover assets for the benefit of employees and other creditors. Your information may support that investigation and improve the recovery available to all creditors.

Do not extend credit to the new company without a personal guarantee

If the new company approaches you for work or materials, treat it as a new credit application. Do not rely on the old trading relationship or assume the director will honour debts left behind in the previous structure. Ask for a personal guarantee from the director, supported by a current asset and liability statement. Ask for payment in advance or cash on delivery terms until the new company establishes a payment record you can verify.

The key difference between a legitimate phoenix business rescue and phoenix activity is the director's dishonest intentions or recklessness. Where a director sets out to intentionally avoid paying debts and liabilities, by transferring assets to another company without paying the true market value, or is reckless as to creditor harm, then the conduct is illegal. If you supply the new company on credit and it fails in the same way, you will have two unpaid debts and the same problem. Protect your position now. If the debt in the old company is substantial and the director refuses to address it, contact CRP today about coordinating qualified debt recovery professionals who understand phoenix structures and can assess your legal options while the trail is still fresh.