The following Corporate Crime practice note Produced in partnership with Micheal Murphy and Amelia Clegg of 23 Essex Street Chambers provides comprehensive and up to date legal information covering:
Asset stripping involves taking company funds or assets while leaving behind the debts. Sometimes directors then transfer only the assets of a company to another similarly named company, not the liabilities, leaving a dormant company which is put into liquidation. This is sometimes also referred to as 'phoenixing'.
Stripping of company assets is normally done for two main reasons:
fraudsters deliberately target a company or companies to take ownership, move the assets and then put the stripped entity into liquidation
'phoenixing'—directors move assets from one limited company to another to 'secure' the benefits of their business and avoid liabilities. Most of the directors will usually be the same in both companies. This usually arises as a way of rescuing the assets of a failing business rather than targeting a company
A phoenix company is where a company is run for a period of time, building up debts as it goes. There may or may not have originally been an intention to pay the debts, but the end result is that the company is unable to continue. At this point the remaining assets may be diverted out of the company to another legal entity sometimes at a price below is true market value in an attempt to hide the assets. In a phoenix firm, some or all of the directors will
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