What Is Phoenix Activity in Building and Construction (and How to Spot It Before You Sign)

Phoenix activity happens when a company director winds up one company with unpaid debts, then continues the same business under a new entity. The new company has a different name, a different ABN, and a clean record. The old company's creditors, including homeowners who paid deposits, are left behind. Construction is the sector where this pattern is most concentrated in Australia. The deposit you paid to the original entity does not follow to the new one. Understanding what this looks like in the public record, before you sign, is the focus of this article.

How Phoenix Activity Works in Practice

Here is the sequence as a homeowner experiences it.

A licensed builder (call it Company A) takes your deposit. Work begins. Over the following months, Company A accumulates unpaid debts to subcontractors and suppliers. The director of Company A has already registered Company B (a new entity with a similar name or a completely different one), which begins operating.

At some point, Company A enters voluntary administration or is wound up. The director of Company A is now running Company B. Your building contract was with Company A. Your deposit was paid to Company A. Company A is now in administration.

You are an unsecured creditor of Company A.

Company B has no legal obligation to complete your home. It did not sign your contract. Whether or not Company B is the same people doing the same work from the same site, the legal relationship is gone. The new entity has a clean public record.

ASIC's definition states that illegal 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."

Why Construction Is the Sector Where This Happens Most Often

The Australian Taxation Office's Phoenix Risk Model, presented to the Senate Economics Committee, found that approximately 72% of all identified phoenix groups contain at least one building or construction entity. Construction also accounts for approximately 27% of all corporate insolvencies nationally (ASIC Corporate Insolvency data, 2024).

Those numbers reflect the structural reasons builders fail at higher rates than other sectors. Construction businesses operate on thin margins: residential builders typically earn 1-5% on turnover. Revenue arrives in lumpy milestone payments, not daily sales. Costs are locked in at contract-signing but continue to rise during a build. When a project goes wrong, there is rarely a financial buffer to absorb it.

The mechanics that make construction financially fragile also make entity re-creation easy. A new company can be registered in a day. A building licence can often be obtained or transferred under a new entity relatively quickly. The cost barriers to opening Company B are low.

The ATO specifically identifies construction as one of the four industries where illegal phoenix activity is "particularly prevalent."

What Phoenix Activity Costs Homeowners

When Company A enters administration, homeowners with incomplete builds face two layers of exposure.

The first is their position in the insolvency. As unsecured creditors, homeowners rank behind secured creditors (banks, equipment financiers) and priority claims. Unsecured creditors in Australian construction insolvencies typically recover 5-15 cents in the dollar.

The second layer is what the state insurance schemes cover, and what they do not.

Each state has a last-resort home warranty scheme. NSW's Home Building Compensation Fund (HBCF) provides a maximum of $340,000 per dwelling, but the sub-limit for incomplete building work is 20% of the contract price. Victoria's Domestic Building Insurance (DBI) covers up to $300,000, also with a 20% sub-limit for incomplete work. Queensland's Home Warranty Scheme (QHWS) covers up to $200,000 per claim.

In practice: if you have paid more than 20% of the contract price before work is complete, you have exposure beyond what any scheme will cover. On a $600,000 build where you have paid $180,000 in progress payments, the incomplete work sub-limit covers $120,000 (20% of contract price). The other $60,000 is an unsecured claim.

The insurance schemes are genuine protections. They are not guarantees against loss. For a detailed breakdown of what HBCF covers in NSW, read the NSW builder insurance guide.

Five Signals in the Public Record Worth Investigating Before You Sign

These are not accusations. They are questions the public record can help you ask before you commit. Each signal can have an innocent explanation. The point is to know about it before you sign, not after.

1. Director linked to prior company liquidations (ASIC records)

Search the director's name on ASIC Connect. The basic search is free and shows current company status and officer names. A paid company extract costs $20 and shows historical director appointments across all companies the person has been associated with. Separately, the ASIC Published Notices website is free and searchable by company name. It returns insolvency notices from 2012 onwards: administration appointments, liquidation appointments, receivership appointments. A notice here confirms a company entered external administration. It does not explain why. What it does not show: intent, misconduct, or why a company failed. Many directors have been associated with companies that entered administration for reasons outside their control. The relevant questions are: how many, over what period, and in what circumstances?

2. Director appears on the ASIC Banned and Disqualified Persons Register

This register is free and searchable by name at asic.gov.au/online-services/search-asic-registers/banned-and-disqualified-registers/. A name appearing here means ASIC has formally disqualified that person from managing corporations, either through court order or administrative action under section 206F of the Corporations Act. What it does not show: disqualification periods that have already expired, or directors whose conduct has not yet reached the threshold for formal action. The absence of a name is not a clearance; it is the absence of a finding.

3. ABN history showing recently cancelled entities or sequential registrations

Search the builder's entity and the director's name on ABN Lookup. Look at the registration date. Look at whether any related business names or ABNs were cancelled recently. A company registered in the last 12-24 months is not automatically a concern. But if the director claims many years of industry experience and the company is very new, a straightforward question follows: under what entity was that prior work conducted, and what happened to that entity? The ABR does not show director names (that is an ASIC function) or the reason for a cancellation. It shows the pattern; it does not explain it.

4. State licence register: nominee linkage and company age

All three major state registers are publicly searchable. NSW: verify.licence.nsw.gov.au. Queensland: my.qbcc.qld.gov.au/s/qbcc-licensee-register. Victoria: bpc.vic.gov.au. Where a company holds the licence, these registers show the name of the nominated supervisor (the qualified individual). Cross-reference the nominee's name and the company's registration date with the ASIC and ABR searches above. What the licence register does not show: director history across prior companies, prior insolvency records, or related entity structures. A clean licence record does not mean a clean director history.

5. Adjudication determinations: subcontractor payment disputes

Under the Security of Payment legislation in each state, subcontractors and suppliers who are not being paid can apply for statutory adjudication. Adjudication determinations that go unpaid can be registered as court judgments. A pattern of active payment disputes with subcontractors, particularly if clustered shortly before a company enters administration, is consistent with the pre-distress window that often precedes a phoenix event. These records are not held in a single easily searchable public register, but court-filed judgment debts may be searchable through state court systems. For a homeowner, the practical version of this check is direct: ask the builder whether they have any current payment disputes with subcontractors or suppliers. The response is itself informative. For more on the court and tribunal record, see How to Check If a Builder Is Financially Stable.

What the Public Record Shows, and What It Does Not

Knowing where to look is useful. Understanding the limits of what you find is equally important.

ASIC records show director appointment dates, company status, and administration history. They show patterns. They do not confirm intent. A director with prior company failures has a history worth asking about. That history does not, on its own, establish that a new entity is structured to defeat creditors.

The same signals can have innocent explanations. A cancelled ABN may reflect a legitimate business restructure. A voluntary administration may reflect market conditions rather than misconduct. A recently incorporated company may simply reflect a new venture by an experienced builder.

ASIC has been acting where the evidence supports it. In February 2023, ASIC found that Roxanne Cornell engaged in phoenix activity across three construction companies (Coconut Post Tensioning, Coconut Group, and Petrox Nominees), which collectively owed $6,133,017 to creditors. ASIC disqualified her from managing corporations for five years. In 2024, ASIC disqualified Queensland construction director Miroslav Samardzija for five years after three companies he was associated with owed $2.34 million to unsecured creditors. In 2025, ASIC disqualified NSW director Anthony Azizi for five years after three construction companies owed a combined $93,708,563 to over 300 creditors. Also in 2025, Victorian director Veronica Roberts was disqualified for five years over four construction sector companies owing $3.5 million (for insolvent trading and unpaid wages, per ASIC's finding, not phoenix activity). These are ASIC's findings, published in official media releases. They are cited here as evidence that the regulator is acting, not as a template for how any particular builder should be characterised.

The purpose of running these checks is not to produce a verdict. It is to surface questions worth asking before you are committed, financially and contractually. By the time a problem becomes apparent, your options are substantially narrower.

How to Check a Builder's Director History Before You Sign

For anyone researching phoenix activity builder Australia, the free starting point covers significant ground.

Search the builder's entity name on ASIC Published Notices for any insolvency notices (free). Search the director's name on the ASIC Banned and Disqualified Register (free). Search the entity on ABN Lookup for registration date and trading name history (free). Check the state licence register for nominee name and licence conditions (free).

Where it gets harder: cross-referencing the director's name across multiple related entities, identifying name variations, and connecting the ABR history to the ASIC company record requires time and familiarity with how the registers interact. A paid ASIC company extract ($20) adds historical director appointments. A Roles and Relationships Extract ($23) shows a company's relational roles across other entities.

TrustSignal's plain-English Builder Report does this cross-referencing work and presents the records located with source citations, so you are working from a consolidated picture rather than running each search separately. Check your builder before you sign or pay a deposit.

For a complete guide to pre-contract verification, the NSW Pre-Contract Builder Checklist and the Complete Verification Guide cover the full process. And if you have a builder who came through a referral, They Came Highly Recommended explains why a recommendation confirms character, not financial health or director history.

Frequently Asked Questions

What is phoenix activity in construction?

Phoenix activity in construction occurs when a building company director winds up a company with unpaid debts (owed to homeowners, subcontractors, the ATO, or suppliers) and then continues the same business under a new company with a new ABN and clean record. ASIC defines illegal phoenix activity as 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." Homeowners who paid deposits or progress payments to the original company are left as unsecured creditors in the administration.

Is phoenix activity illegal in Australia?

Deliberately transferring a business to a new entity at below-market value to avoid paying creditors is illegal under the Corporations Act 2001, as strengthened by the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020. Criminal penalties can include up to 15 years imprisonment. Legitimate business restructuring, where assets are independently valued and sold at market value through a proper insolvency process, is not illegal. For a homeowner, the practical outcome of either scenario is the same: the deposit paid to the old entity does not transfer to the new one.

How common is phoenix activity in the construction industry?

The ATO's Phoenix Risk Model, presented to the Senate Economics Committee, found that approximately 72% of all identified phoenix groups contain at least one building or construction entity. The ATO specifically identifies construction as one of the four industries where illegal phoenix activity is "particularly prevalent." Construction also accounts for approximately 27% of all corporate insolvencies nationally (ASIC, 2024).

What happens to my deposit if my builder phoenixes?

Your deposit was paid to the original contracting entity. If that entity enters administration, you become an unsecured creditor of it. Your primary protection is the state insurance scheme: HBCF in NSW (up to $340,000, with a 20% of contract price sub-limit for incomplete work), DBI in Victoria (up to $300,000, same 20% sub-limit), or QHWS in Queensland (up to $200,000). Amounts paid beyond what the sub-limit covers become unsecured claims in the administration. Unsecured creditors in Australian construction insolvencies typically recover 5-15 cents in the dollar.

Does the licence register show if a builder's director has prior company failures?

No. State licence registers show current licence status, class, and conditions. They do not cross-reference ASIC records. For director history across companies, the relevant searches are ASIC Connect (paid extract, $20) for historical director appointments, and the ASIC Published Notices website (free) for insolvency notices from 2012.

How can I check if a builder's director is disqualified from managing companies?

The ASIC Banned and Disqualified Persons Register is publicly searchable and free. Go to asic.gov.au/online-services/search-asic-registers/banned-and-disqualified-registers/ and search by the individual's name. A director who has been formally disqualified under section 206F of the Corporations Act will appear there. The absence of a name means there is no formal ASIC finding. It does not mean the person has no relevant history.

How can I check if a builder's director has prior company failures?

The fastest free check is to search the builder's company name on ASIC Published Notices (publishednotices.asic.gov.au) for any insolvency notices since 2012. For the director's history across all prior companies, ASIC Connect offers a paid company extract for $20 that shows historical director appointments. The ASIC Banned and Disqualified Persons Register is free and shows formal disqualifications. State licence registers do not cross-reference these records, which is why running both searches matters.

Sources

1. ASIC. "Illegal phoenix activity." asic.gov.au
2. ASIC. "23-073MR: ASIC disqualifies former construction industry director for five years after engaging in illegal phoenix activity." February 2023. asic.gov.au
3. ASIC. "24-078MR: ASIC disqualifies QLD construction director for 5 years." April 2024. asic.gov.au
4. ASIC. "25-140MR: ASIC disqualifies NSW construction director for five years." 2025. asic.gov.au
5. ASIC. "25-222MR: Victorian construction director disqualified for five years over insolvent trading and unpaid wages." 2025. asic.gov.au
6. ASIC. "Annual ASIC insolvency data reveals increase in companies failing." July 2024. asic.gov.au
7. ASIC Banned and Disqualified Persons Register. asic.gov.au/online-services/search-asic-registers/banned-and-disqualified-registers/
8. ATO. "Illegal phoenix activity." ato.gov.au
9. ATO. "Phoenix Taskforce." ato.gov.au
10. Parliament of Australia, Senate Economics References Committee. "I Just Want to Be Paid, Chapter 5: Illegal Phoenix Activity." 2015. aph.gov.au
11. Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020. legislation.gov.au
12. icare NSW. "HBCF Homeowner Fact Sheet." icare.nsw.gov.au
13. Consumer Affairs Victoria. "Domestic building insurance and insolvency." consumer.vic.gov.au
14. QBCC. "Queensland Home Warranty Scheme." qbcc.qld.gov.au
15. ABN Lookup / Australian Business Register. abr.business.gov.au

Disclaimer

This article describes patterns in the public record and general information about the Australian regulatory framework. It does not characterise any specific builder, director, or entity as having engaged in phoenix activity. Information found in public registers may have innocent explanations. The four ASIC enforcement cases named in this article are cited solely as matters of public record, based on official ASIC media releases. This article is general information only and does not constitute legal, financial, or professional advice. If you have concerns about a specific builder or transaction, seek independent legal advice.