Regulating against corporate phoenix activity

This paper considers the adequacy and efficiency of existing legal and regulatory frameworks to deal with corporate phoenix activity. Phoenix activity, which is often triggered by a solvency crisis, is estimated to cost the Australian economy up to $3 billion each year. Despite the raft of piecemeal Australian legislation directed at this activity, phoenix activity does not appear to be abating. This paper considers regulatory approaches to detection and enforcement of the underlying law. This study reveals and explores a perception that the law is deficient, and the tension that exists between the adequacy of the law and the regulatory approach.

Phoenix activity: Regulatory challenges and the law

Remedying the mischief of phoenix activity is of practical importance. The benefits include continued confidence in our economy, law that inspires best practice among directors, and law that is articulated in a manner such that penalties act as a sufficient deterrent and the regulatory system is able to detect offenders and bring them to account. Any further reforms must accommodate and tolerate legal phoenix activity. Phoenix activity pushes tolerance of entrepreneurial activity to its absolute limits. The wisest approach would be to front end the reforms so as to alleviate the considerable detection and enforcement burden upon regulatory bodies. There is little doubt that breach of the existing law is difficult and expensive to detect; and this is a significant burden when regulators have shrinking budgets and are rapidly losing feet on the ground. This front end approach may need to include restrictions on access to limited liability. The more limited liability is misused, the stronger the argument to limit access to limited liability. This paper proposes that such an approach is a legitimate next step for a robust and mature capitalist economy.

The conundrum of phoenix activity in Australia: Is further reform necessary?

Corporate phoenixing activity is estimated to cost the Australian economy $1-3 billion dollars annually. Significant questions arise as to whether existing legal frameworks are adequate to deal with phoenix activity, and whether further reform is necessary. Bills proposing reform appear to be languishing amid doubts as to their potential effectiveness. This paper will examine the conundrum presented by phoenix activity, the importance of further reform and the impact of the lack of a statutory definition of ‘phoenix activity’ on a regulatory environment that not only uses the term, but punishes offenders accused of it.

The conundrum of phoenix activity: Is further reform necessary?

Phoenix activity presents a conundrum for the law and its regulators. While there is economic cost associated with all phoenix activity, the underlying behaviour is not always illegal. A transaction with indicators of phoenix activity may be an entirely innocent and well-intentioned display of entrepreneurial spirit, albeit one that has ended in failure. Restructuring post business failure is not illegal per se. Recent reforms targeting phoenix activity fail to grapple with the vast range of behaviour that can be described as phoenix activity since they do not differentiate between legal and illegal activity. This article explores the importance of the distinction between legal and illegal phoenix activity, the extent to which the existing law captures a range of behaviour that can be described as illegal phoenix activity and the response of key regulators and governmental bodies to the absence of single law that attempts to define illegal phoenix activity.

Economic theory informing approaches to phoenix activity in small business: A neo-Schumpeterian analysis

The adequacy and efficiency of existing legal and regulatory frameworks dealing with corporate phoenix activity have been repeatedly called into question over the past two decades through various reviews, inquiries, targeted regulatory operations and the implementation of piecemeal legislative reform. Despite these efforts, phoenix activity does not appear to have abated. While there is no law in Australia that declares ‘phoenix activity’ to be illegal, the behaviour that tends to manifest in phoenix activity can be capable of transgressing a vast array of law, including for example, corporate law, tax law, and employment law. This paper explores the notion that the persistence of phoenix activity despite the sheer extent of this law suggests that the law is not acting as powerfully as it might as a deterrent. Economic theories of entrepreneurship and innovation can to some extent explain why this is the case and also offer a sound basis for the evaluation and reconsideration of the existing law. The challenges facing key regulators are significant. Phoenix activity is not limited to particular corporate demographic: it occurs in SMEs, large companies and in corporate groups. The range of behaviour that can amount to phoenix activity is so broad, that not all phoenix activity is illegal. This paper will consider regulatory approaches to these challenges via analysis of approaches to detection and enforcement of the underlying law capturing illegal phoenix activity. Remedying the mischief of phoenix activity is of practical importance. The benefits include continued confidence in our economy, law that inspires best practice among directors, and law that is articulated in a manner such that penalties act as a sufficient deterrent and the regulatory system is able to detect offenders and bring them to account. Any further reforms must accommodate and tolerate legal phoenix activity, at least to some extent. Even then, phoenix activity pushes tolerance of repeated entrepreneurial failure to its absolute limit. The more limited liability is misused and abused, the stronger the argument to place some restrictions on access to limited liability. This paper proposes that such an approach is a legitimate next step for a robust and mature capitalist economy.

Utilisation of a novel ProteaseTag™ activity immunoassay for the specific measurement of neutrophil elastase in BAL from children with cystic fibrosis

Introduction: Neutrophil elastase (NE) is a serine protease implicated in the pathogenesis of several respiratory diseases including cystic fibrosis (CF). The presence of free NE in BAL is a predictor of subsequent bronchiectasis in children with CF (Sly et al, 2013, NEJM 368: 1963-1970). Furthermore, children with higher levels of sputum NE activity (NEa) tend to experience a more rapid decline in FEV1 over time even after adjusting for age, gender and baseline FEV1 (Sagel et al, 2012, AJRCCM 186: 857-865). Its detection and quantification in biological samples is however confounded by a lack of robust methodologies. Standard assays using chromogenic or fluorogenic substrates are not specific when added to complex samples containing multiple proteolytic and hydrolytic enzymes. ELISA systems measure total protein levels which can be a mixture of latent, active and protease-inhibitor complexes. We have therefore developed a novel assay (ProteaseTag™ Active NE Immunoassay), which couples an activity dependent NE-Tag with a specific antibody step, resulting in an assay which is both selective and specific for NEa. Aims: To clinically validate ProteaseTag™ Active NE for the detection of free NEa in BAL from children with CF. Methods: A total of 95 paediatric BAL samples [CF (n=76; 44M, 32F) non-CF (n=19; 12M, 7F)] collected through the Study of Host Immunity and Early Lung Disease in CF (SHIELD CF) were analysed for NEa using ProteaseTag™ Active NE (ProAxsis Ltd) and a fluorogenic substrate-based assay utilising Suc-AAPV-AMC (Sigma). IL-8 was measured by ELISA (R&D Systems). Results were analysed to show comparisons in free NEa between CF and non-CF samples alongside correlations with a range of clinical parameters. Results: NEa measured by ProteaseTag™ Active NE correlated significantly with age (r=0.3, p=0.01) and highly significantly with both IL-8 (r=0.4, p=<0.0001) and the absolute neutrophil count (ANC) (r=0.4, p=<0.0001). These correlations were not observed when NEa was measured by the substrate assay even though a significant correlation was found between the two assays (r=0.8, p<0.0001). A trend towards significance was found between NEa in the CF and non-CF groups when measured by ProteaseTag™ Active NE (p=0.07). Highly significant differences were found with the other inflammatory parameters between the 2 groups (IL-8: p=0.0002 and ANC: p=0.006). Conclusion: NEa as a primary efficacy endpoint in clinical trials or as a marker of inflammation within the clinic has been hampered by the lack of a robust and simple to use assay. ProteaseTag™ Active NE has been shown to be a specific and superior tool in the measurement of NEa in paediatric CF BAL samples (supporting data from previous studies using adult CF expectorated samples). The technology is currently being transferred to a lateral flow device for use at Point of Care. Acknowledgements: This work was supported by the National Children’s Research Centre, Dublin (SHIELD CF) and grants from the Medical Research Council and Cystic Fibrosis Foundation Therapeutics.

An analysis of drinker diagnosis, referral and rehabilitation activity. Analytic study VI. Final report.

National Highway Traffic Safety Administration, Office of Driver and Pedestrian Programs, Washington, D.C.