ASIC disqualifies Perth director as phoenix home to roost

Wembley Downs-based Tanvanth Singh Sandhu has been disqualified from managing corporations for three years by the Australian Securities and Investments Commission, bringing the total to 19 for the first quarter of the 2007-08 financial year.

ASIC's investigation found that Mr Sandhu breached his duties as a director of Ergotel Corporation Ltd by allowing the company to loan money to another director at a time when it was known that the company could not pay its own debts.

ASIC also found, in relation to Swepdri Ltd, that Mr Sandhu failed to provide the liquidator with a report regarding the financial affairs of the company and that he breached his duties as a director by allowing the company to enter into an uncommercial loan agreement.

In an announcement, ASIC said these most recent disqualifications reflected the agency's commitment to addressing phoenix activity and removing directors who fail to fulfil their responsibilities to creditors.

Phoenix activity is typically associated with directors who transfer the assets of an indebted company into a new company of which they are also directors. The director then places the initial company into administration or liquidation with no assets to pay creditors, meanwhile continuing the business using the new company structure.

The full text of an ASIC announcement is pasted below

The Australian Securities and Investments Commission (ASIC) has disqualified another six directors from managing corporations, bringing the total to 19 for the first three months of the 07/08 financial year.

These most recent disqualifications, which took effect in September 2007, reflect the agency's commitment to addressing phoenix activity and removing directors who fail to fulfil their responsibilities to creditors.

Phoenix activity is typically associated with directors who transfer the assets of an indebted company into a new company of which they are also directors. The director then places the initial company into administration or liquidation with no assets to pay creditors, meanwhile continuing the business using the new company structure.

'Sixteen of the disqualifications to date have followed reports from liquidators who have received funding under the Assetless Administration Fund scheme', said ASIC's Executive Director of Consumer Protection, Mr Greg Tanzer.

'This scheme provides liquidators of assetless companies with funds to conduct rigorous investigations and, in turn, more detailed reports to ASIC which help reduce the scope for phoenix activity and improve corporate conduct generally.'

Director disqualifications - September 2007

Mr Tanvanth Singh Sandhu

ASIC has disqualified Mr Tanvanth Singh Sandhu, of Wembley Downs, Western Australia, from managing corporations for three years.

The disqualification of Mr Sandhu follows an ASIC investigation into his role with respect to the failed companies, Ergotel Corporation Ltd and Swepdri Ltd.

ASIC's investigation found that Mr Sandhu breached his duties as a director of Ergotel Corporation Ltd by allowing the company to loan money to another director at a time when it was known that the company could not pay its own debts. ASIC also found, in relation to Swepdri Ltd, that Mr Sandhu failed to provide the liquidator with a report regarding the financial affairs of the company and that he breached his duties as a director by allowing the company to enter into an uncommercial loan agreement.

Mr Sandhu was also the director of a number of companies deregistered by ASIC for failing to lodge financial returns.

Mr David Renton Whittle

ASIC has disqualified pharmacist, Mr David Renton Whittle, of West Wodonga, Victoria, from managing corporations for 18 months.

Mr Whittle's disqualification follows an ASIC investigation into his role in two failed companies, Whittle Investments (WA) Pty Ltd and MPS Security Consultants Pty Ltd.

ASIC's investigation found that Mr Whittle failed to provide all of the books and records of Whittle Investments (WA) Pty Ltd to the company's liquidator and that certain creditors of MPS Security Consultants Pty Ltd were paid, to the detriment of other creditors, including the ATO.

The above disqualified individuals have the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.

Mr Drew Adrian Kellahan

ASIC has disqualified fitness centre operator, Mr Drew Adrian Kellahan, of Cairns, Queensland, from managing corporations for four years.

Mr Kellahan's disqualification follows an ASIC investigation into his role in regards to four failed companies; Central Fitness Pty Ltd, Rapside Pty Ltd, BOC Holdings Pty Ltd and IH Management Pty Ltd.

ASIC's investigation found that all four companies failed, owing substantial debts to the Australian Taxation Office (ATO) and that Mr Kellahan entered into a phoenix arrangement whereby he transferred the assets of Central Fitness Pty Ltd to another entity he controlled with the intention of avoiding creditors, in particular the ATO. Further, Mr Kellahan entered into uncommercial transactions that were not in the best interests of Central Fitness Pty Ltd and that served to advantage some creditors while disadvantaging the balance of creditors.

Mr Kellahan also failed to maintain proper books and records and assist the liquidators of Rapside Pty Ltd and BOC Holdings Pty Ltd.

Mr Alex Stefopoulos

ASIC has disqualified cleaning contractor, Mr Alex Stefopoulos of Chapman, ACT, from managing corporations for four years.

The disqualification of Mr Stefopoulos follows an investigation into his role in three failed companies; Karli Investments Pty Ltd, Cummire Pty Ltd and Jaazcorp Pty Ltd.

ASIC's investigation found that Mr Stefopoulos had breached his obligations as a director by failing to pay taxation and employee superannuation entitlements.

Mr Stefopoulos also arranged for the business and assets of his cleaning operation to be transferred to a new corporate entity once the financial position of the old entity became untenable. The old entity was then wound up with unpayable liabilities.

Mr Adrian Frederick Hodson and Mr Jason Scott Hodson

ASIC has disqualified father and son retailers, Mr Adrian Frederick Hodson of Benowa, Queensland and Mr Jason Scott Hodson formerly of Bundall, Queensland, from managing corporations for four years and three years respectively.

The disqualifications of Mr Adrian Hodson and Mr Jason Hodson follow an ASIC investigation into their roles in regard to the failed companies, The Heritage Group Pty Ltd and Qld Country Properties Pty Ltd. Mr Adrian Hodson's role in Ajay Holdings Pty Ltd and Lakebrock Pty Ltd was also investigated.

ASIC's investigation found the companies failed owing significant amounts to creditors and statutory debts to the ATO and in the case of The Heritage Group Pty Ltd, a statutory debt to the Australian Customs Service.

ASIC also found that Mr Adrian Hodson and Mr Jason Hodson breached their duties as directors of The Heritage Group Pty Ltd by not preparing financial statements and making payments to themselves at a time when the company could not pay its outstanding debts.