The federal government is going after directors of failed companies who, having avoided liability for workers' entitlements and other debts, restart the business under a similar name.
Under draft legislation released by the government today, directors of a failed company can be held liable for its debts if their new company has a similar name.
The practice is commonly referred to as "phoenixing".
"This will stop directors from exploiting the limited liability protections in the corporations law to avoid having to pay any debts," parliamentary secretary David Bradbury said in a statement.
"This will ensure that directors cannot keep racking up debts through multiple phoenix companies and escape their obligations."
Under a second bill, the government will give the Australian Securities and Investments Commission the power to wind up a company that appears to no longer be carrying on its business.
That will ensure government payments to companies, such as paid parental leave, will get to employees.
The draft bills can be found at www.treasury.gov.au.
