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Monday 4 April 2022

22-076MR NSW director disqualified from managing corporations for five years after engaging in illegal phoenix activity

ASIC has disqualified former cleaning and labour hire director Enrico Pucci of Sydney, NSW, from managing corporations for the maximum period of five years due to his involvement in the failure of three companies.

Between August 2012 and April 2020 Mr Pucci was a director of:

  • GPSFM Pty LtdC.N. 607 566 156;
  • Grouped Property Services Pty Ltd C.N. 121 762 534; and
  • National Contractors Pty Ltd C.N. 159 741 518.

GPSFM provided cleaning, security management and maintenance services to commercial premises. Grouped Property Services and National Contractors provided labour hire to the group of companies connected to Mr Pucci, including GPSFM.

ASIC found that Mr Enrico acted improperly and failed to meet his obligations as director by:

  • acting as the shadow director and controlling mind of National Contractors;
  • failing to ensure the companies complied with their tax obligations;
  • failing to ensure consideration was provided to GPSFM when it transferred its business to a related entity;
  • failing to ensure that GPSFM and Grouped Property Services kept adequate records; and
  • failing to ensure records of GPSFM and Grouped Property Services were provided to the liquidator.

In addition, ASIC relied on the Federal Court decision in Fair Work Ombudsman V Grouped Property Services Pty Ltd [2016] FCA 1034 which found that while Mr Pucci was its sole director, Grouped Property Services:

  • breached the Fair Work Act 2009 on multiple occasions;
  • showed a ‘flagrant disregard for the law in the face of numerous attempts by the Ombudsman to bring its legal obligations to its attention…’; and
  • engaged in the “shameless exploitation of a vulnerable workforce and inept attempts to avoid its legal consequences”.

The Federal Court also found that Mr Pucci had established a long line of companies which evidence pointed “strongly to a practice of phoenixing”.

ASIC Commissioner Danielle Press said, ‘Illegal phoenix activity causes serious harm that often leads to creditors and employees not being paid money owed to them. ASIC takes illegal phoenix activity very seriously and will hold people who engage in this conduct accountable. ASIC will continue to work closely with other agencies within the Phoenix Taskforce to share information and intelligence to detect, deter and disrupt this behaviour.’

At the time of ASIC’s decision, the three companies owed a combined total of $9,710,858 to creditors, including $2.4m owing to the Australian Taxation Office, $1.27m to the NSW State Revenue Office and $711,730 in an outstanding judgment the matter of Fair Work Ombudsman v Grouped Property Services Pty Ltd.

In disqualifying Mr Pucci, ASIC relied on supplementary reports lodged by GPSFM’s liquidator, William Cotter of Robson Cotter Insolvency Group, Grouped Property Services’ liquidator, Schon Condon of Condon Advisory Group and National Contractors’ liquidator Steven Naidenov of Aston Chace Group.  ASIC assisted Mr Cotter and Mr Naidenov to prepare their reports by providing funding from the Assetless Administration Fund.

Mr Pucci is disqualified from managing corporations until 7 March 2027.

Mr Pucci has 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
  • practising in the financial services or credit industry.

More information about ASIC’s work in combatting illegal phoenix activity can be found here.

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.

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.

Last updated: 04/04/2022 12:00