Former engineering company directors Matthew and Alissa Walsh, of Riddells Creek, Victoria, have been disqualified from managing corporations for the maximum period of five years due to their involvement in the failure of numerous companies.

Between December 2012 and November 2019 Mr Walsh was a director of six companies:

• Walsh Industrial Services Pty Ltd (A.C.N. 627 016 433)
• Walsh Equipment Services Pty Ltd (ACN 601 879 314) 
• Walsh Engineering Services Pty Ltd (A.C.N. 601 879 305)
• Complete Equipment Solutions Pty Ltd (A.C.N. 161 660 260)
• ACN 161 867 652 Pty Ltd
• ACN 161 859 927 Pty Ltd 

Between August 2015 and July 2018, Mrs Walsh was also a director of Walsh Equipment Services and Walsh Engineering Services.

The companies were involved in mechanical engineering, industrial engineering and other related operations.

ASIC found that Mr Walsh engaged in illegal phoenix activity by transferring the businesses of his six indebted companies to new companies, leaving the initial companies with no assets to pay unsecured creditors, and continuing what was essentially the same businesses using the new companies.

ASIC also found that Mr Walsh:

• failed to lodge required documents, including business activity statements, income tax returns and PAYG payment summaries for Walsh Industrial Services, Walsh Equipment Services and Walsh Engineering Services,
• failed to comply with his record keeping obligations and provide records to the liquidator for Walsh Industrial Services,
• made payments to related companies and trade creditors before paying ATO debts in relation to Walsh Engineering Services,
• directed funds of Walsh Engineering Services be paid to an account unrelated to the company, which was in breach of the deed of company arrangement, and
• failed to prevent Walsh Engineering Services from incurring debts totalling $484,829.54 while it was insolvent.

ASIC found that Mrs Walsh failed in her director’s duties, including her responsibility to act with appropriate care and diligence, when she:

• failed to ensure both companies lodged necessary documents, including activity statements, an income tax return and a PAYG payment summary,
• failed to take an active part in the management of Walsh Engineering Services,
• failed to prevent Walsh Engineering Services from trading while insolvent,
• failed to ensure that all creditors of Walsh Engineering Services were paid fairly,
• funnelled funds from debtors into the bank account of an associated party instead of paying them to the administrators Walsh Engineering Services, which was in breach of the deed of company arrangement.

At the time of ASIC’s decisions, the six companies owed a combined total of $5,401,007.66 to unsecured creditors, including $4,751,142.43 to the ATO.

In disqualifying Mr Walsh and Mrs Walsh, ASIC relied on supplementary reports lodged by Walsh Industrial Services’ liquidator Stirling Horne of PKF, Walsh Equipment Services’ liquidator Andrew Juzva of GS Andrews Advisory, and Walsh Engineering Services’ liquidators Shane Deane and Nicholas Giasoumi of Dye & Co. Pty Ltd. ASIC assisted Mr Horne, Mr Deane and Mr Giasoumi in preparing their reports by providing funding from the Assetless Administration Fund.

Mrs Walsh is disqualified from managing corporations until 22 February 2027 and Mr Walsh is disqualified from managing corporations until 10 March 2027.

Mr Walsh and Mrs Walsh have the right to seek a review of ASIC’s decision by the Administrative Appeals Tribunal.

Background

Section 206F of the Corporations Act allows ASIC to disqualify a person from managing corporations for a maximum period of five years if, within a seven year period, the person was an officer of two or more companies, and those companies were wound up and a liquidator provides a report to ASIC about each of the company’s inability to pay its debts.

ASIC also maintains a banned and disqualified persons register that provides information about people who have been disqualified from:

• involvement in the management of a corporation;
• auditing self-managed superannuation funds (SMSFs); or
• practicing in the financial services or credit industry.

ASIC is a member of the Phoenix Taskforce, which comprises federal, state and territory government agencies who collaborate to combat illegal phoenix activity. The aim of the Phoenix Taskforce is to provide a whole-of-government approach to identify, disrupt and prosecute those who engage in or facilitate illegal phoenix activity. Read more about ASIC’s work in combatting illegal phoenix activity.

Suspected phoenix activity can be reported to ASIC or the ATO by calling 1800 060 062, online at the ATO website or by emailing PhoenixReferrals@ATO.gov.au.