Can a Director Start a New Business After Liquidation?
In most cases, yes.
Australian law does not prohibit directors of a liquidated company from starting a new business or even a business in the same industry. However, the new company must be genuinely independent of the old one, and the process must be legal and transparent.
What You Can Do After Liquidation
What You Cannot Do (Illegal Phoenix Activity)
Illegal phoenix activity occurs when a director deliberately liquidates a company to avoid debts (especially ATO and employee entitlements), then starts a new business that’s essentially the same — often transferring assets without paying creditors.
Illegal actions include:
Transferring assets from the old company to the new one without fair market value
Using the same business name or branding to confuse creditors or customers
Avoiding outstanding debts or obligations intentionally
Under the Corporations Act 2001, ASIC and the ATO have powers to investigate and prosecute illegal phoenix behaviour, including civil and criminal penalties.
How to Restart a Business Legally
1. Wait Until Liquidation Is Finalised
You must wait for the liquidator to complete the process, which includes:
Selling company assets
Paying creditors
Investigating director conduct
Deregistering the company
2. Do Not Transfer Assets Privately
If you want to purchase old company assets (equipment, domain names, etc.), they must be:
Valued at market rates
Purchased through the liquidator
Fully documented with a payment trail
3. Avoid Deceptive Similarities
Even if legal, using:
The same name
Identical branding
Same website or contact details
can look suspicious. This could lead to ASIC scrutiny and claims of misleading conduct.
4. Maintain Proper Records
If you do restart, ensure:
Full financial transparency
Proper tax lodgements
Employee entitlements paid on time
Are There Restrictions for Directors?
Some directors may be disqualified from managing companies for up to 5 years under Section 206F of the Corporations Act if:
They’ve been involved in multiple failed companies
Mismanaged company funds
Traded while insolvent
Always check your status with ASIC before registering a new business.
Alternative: Consider a Small Business Restructure (SBR) Before Liquidation
If your company is still trading but under financial stress, consider Small Business Restructuring (SBR) as an alternative. It allows you to:
Legally restructure ATO and other unsecured debts
Continue trading
Avoid liquidation and director penalties
Conclusion
Yes, you can restart a business after liquidation — but do it ethically and legally. Consult with a registered liquidator or restructuring professional before taking action. Avoid shortcuts, as illegal phoenixing can lead to severe penalties, including director bans and criminal charges.
References
ASIC: Illegal Phoenix Activity
Treasury: Phoenixing Offences Legislation
Corporations Act 2001 (Cth), Sections 206F, 588G
ATO: Illegal Phoenix Activity
ARITA: Restarting After Insolvency
