The Companies Act 1993 defines a phoenix company as being, in relation to a failed company, a company that at any time before or within five years after the commencement of the liquidation of a failed company, is known by a name that is also a pre-liquidation name of a failed company or is a similar name. When phoenix company arrangements are established in which the new company created bears a similar name, similar assets and similar management structure to a failed company, the purposes of such companies are usually part of a scheme either to circumvent obligations to creditors of the failed company (avoid debts owed) or to mislead the public into believing they are dealing with the same entity as previous, possibly as part of an attempt to mislead creditors of the previous company.
Under new phoenix company provisions, a director of a failed company must not for a period of five years after the date of commencement of liquidation of the failed company –
a. be a director of a phoenix company; or
b. directly or indirectly be concerned in or take part in the promotion, formation, or management of a phoenix company; or
c. directly or indirectly be concerned in or take part in the carrying on of a business that has the same name as the failed company’s pre-liquidating name or a similar name.
Subsection (b) as pointed out by Stephanie Pettigrew a partner in Anderson Lloyd, “is effectively an anti-evasion provision, which will prevent the director of a failed company nominating a partner, spouse or any other related person as a director of the phoenix company in an attempt to avoid these provisions.” Subsection (c) as she notes “relates to a “business” rather than to just a company, and therefore a director of a failed company cannot work as a sole trader or in partnership using the name of the failed company for business purposes.”
A failed company means a company that was placed in liquidation at a time when it was unable to pay its due debts.
A “pre-liquidation name” is: any name (including any trading name) of a failed company in the 12 months before the commencement of that company’s liquidation.
The new provisions under s. 386A of the Companies Act 1993 provide criminal sanctions designed to strongly deter company directors setting up phoenix companies. The new sanctions took effect on 1 November 2007 (see refs below).
Vixen Direct Ltd and Alleged Breaches of Phoenix Company Law.
On 31 January 2001, the sole director of a company of which Stephen Peter Crow (Steve Crow) had formerly been director from 8/02/95 to 18/12/98 had its name changed to Vixen Direct Ltd. That sole director was Crow’s “live-in partner” Fiona Elizabeth McLean Gibb, who became such when he resigned as director, ‘handing the reigns to her’, so to speak. The company concerned (Co. No. 608726), first registered on 20/12/93, had Ms Fiona Gibb as its sole director from 18/12/98 to 20/12/01 and traded in hard-core porn DVDs, videos and sex toys etc under the registered name Vixen Direct Ltd from 31/01/01 up until 29/11/05. Ms Gibb’s boastful account of the successes of her hard-core porn company were covered in an article entitled “Sex swells the kitty” published on 2nd November 2001, six weeks before she resigned as director. She claimed that for the two years she directed the company sales of porn went up by 600% each year.
After her resignation, her ex-partner Steve Crow was reappointed as director on 20/12/01 (soon after he split from Ms Fiona Gibb). Along with Reinder Marten Reitzema of 1d Roberta Avenue, Glendowie, also appointed at that time, they directed it until Reitzema resigned as director on 11/03/03. Crow was left as sole director and remained so until 8/03/06 when under his leadership the company was put into liquidation under the name Les Obstacles de L’amour Ltd (Co. No. 608726).
Steve Crow who was overwhelmed by creditors including the IRD clamouring for money owed, changed his failing company’s name from Vixen Direct Ltd to Private Media Ltd on 29/11/05 and then three weeks before it was placed into liquidation on 8/03/06, changed its named again on 15/02/06 to Les Obstacles de L’amour Ltd. Creditors were becoming ‘les obstacles’ to him, preventing him from swelling the kitty via sex.
On 4 December 2005, only five days after changing the name of Vixen Direct Ltd to Private Media Ltd, Steve Crow made his move to create a “phoenix company”, another one called Vixen Direct Ltd (Co. No. 1738131) dealing with the same hard-core porn merchandise, again under his sole directorship. He faxed through to the Companies Office Certificates of Consent of Director and Shareholder for the new company at 15:09 on 4 December, identifying the source of the office communication fax as “Vixen Direct Ltd”. On the two Certificates he wrote that they had been completed by “Stephen Crow, Vixen Direct Limited, PO Box 28051 Remuera, Tel. 64-95263550”. However, the new company (No 1738131) was not registered until the next day on 5 December 2005 at 9:3:37 when Crow’s Application to Incorporate a Company was completed on line and registered.
Mr Crow’s use of the company name “Vixen Direct Limited” to identify his postal address on two certificates filed with the Companies Office at a time when no such company by this name was registered, is arguably an offence under sections 377 and 381 of the Companies Act 1993 (Co. No. 608726 that had had this name up until 29/11/05 had had it changed as noted to Private Media Ltd). Furthermore, his application for incorporation of the new “phoenix’ Vixen Direct Ltd made on line, similarly breached the Act in that he identified himself as “Stephen Crow, Eden Digital Limited” – when no such company was registered at that time.
The new “Vixen Direct Ltd” (Co. No. 1738131) was indeed a “phoenix company”. Within 15 months, on 29 March 2007, it was struck off the Register of Companies, presumably for having failed to file any annual returns. Having served Crow’s purpose with respect to assisting him avoid his obligations to creditors and IRD, or so it would seem, he moved on. This phoenix company had been owned by CVC Group Ltd of which Steve Crow was, and still is, a director.
The Liquidator’s Report on Les Obstacles de L’amour Ltd (Co No. 608726; formerly Private Media Ltd and prior to that Vixen Direct Ltd), dated 13th March 2006, reveals that $141,554 is still owed by the company to IRD and the total deficiency to unsecured creditors and shareholders remains at $307,218. The Liquidator has made it clear that there is no money available to unsecured creditors or shareholders and the company has not been struck off yet (at the request of IRD) because IRD is still pursuing its claim against the failed company.
The Liquidator may well be advised to check the trading operations, if any, of the phoenix company “Vixen Direct Ltd” (No 1738131) to follow the $448,772 money trail.
On 9/12/08 Steve Crow revived the name Vixen Direct Limited yet again, when he changed the name of another company he directed (Co. No. 514464) from Vixen Wholesale Ltd to Vixen Direct Ltd. It traded under this name illegally until 1 May 2009, a period of almost six months, before having its name changed on 1 May 2009 to Z4K74D Ltd. It was put into liquidation by Mr Crow on 27 May 2009.
Again it served Mr Crow’s financial purposes to create this additional phoenix company arrangement that bears the same or similar names, similar assets and similar management structures to his failed company. As noted above, the purposes of such companies is usually part of a scheme either to circumvent obligations to creditors of the failed company (avoid debt payments) or to mislead the public into believing they are dealing with the same entity as previously, possibly as part of an attempt to mislead creditors of the previous company.
The Liquidator may well be advised to check the trading operations, if any, of the phoenix company “Vixen Direct Ltd” (No 514464) over the period 9/12/08 to 1/05/09) to follow the $448,772 money trail.
Steve Crow Boasts about Vixen Direct and his NZ Porn business.
Steve Crow still boasts that his sole trading entity “Vixen Direct” is currently selling and distributing hard core porn DVDs, lubes, sex toys, and mags etc on line via its website www.vixen.co.nz. In fact he boasts that it is still “New Zealand’s largest locally owned distributor of adult DVDs” and is a major financial sponsor of his Erotica Lifestyles Expo 2009-2011. The following promotional appears on his current website marketing the recent ASB Showgrounds based Erotica Lifestyles Expos (25-27 September 2009) and Boobs on Bikes porn promos and those scheduled and advertised for 2010 and 2011.
“Simply put, without Vixen Direct it is unlikely Erotica would exist. Vixen is Erotica’s “sister company” and is New Zealand’s largest locally owned distributor of adult DVD’s. Next time you go to buy an X-rated DVD online, check out Vixen; we only sell licensed, legal titles, unlike many of our competitors. Watch out soon for our new [porn] website which will include toys, mags, lubes etc. etc etc.”
Source: http://www.eroticaexpo.co.nz/partners
Steve Crow even has the gall to boast of Vixen Direct being a “sister company” to Erotica Expo Ltd. Both are currently in liquidation along with two other companies directed by Mr Crow (Eden Media Ltd and Malibu Media Ltd).
It is a clear breach of s 386A of the Companies Act 1993 for company director Steve Crow to continue to work as a sole trader or in partnership under the name of a failed company for business purposes. Vixen Direct Ltd (Co. No. 608726) was put into liquidation on 8 March 2006 and Vixen Direct Ltd (Co. No. 1738131) was struck off the register of companies on 29 March 2007 and Vixen Direct Ltd (Co. No. 514464) was put into receivership on 27 May 2009.
The criminal sanction embodied in S. 386A came into effect on 1 November 2007. Despite this Steve Crow changed the name of Vixen Wholesale Ltd to Vixen Direct Ltd on 9/12/08 and it remained with this name until 1 May 2009 when changed to Z4K74D and then placed into liquidation on 27 May 2009. The name “Vixen Direct Ltd” was the registered name for Co No. 608726 up to 29 November 2005, just three months before it was put into liquidation on 8 March 2006.
Vixen Direct has remained a sole trader in hard-core porn throughout 2007 and up to the present time.
See: http://www.finda.co.nz/business/listing/1v2r/vixen-direct/
Vixen Direct, 45 Stanhope Road Ellerslie Auckland City Auckland 1051
See: http://yellow.co.nz/browse/companies/vixen-direct-limited/
Adding to this confusion is the fact that Steve Crow registered a new company
(Co. No. 1629978) on 10 May 2005, which had its name changed to Vixen Publications Ltd on 2 July 2007. It too imports and markets hard-core pornography. The similarity of its name to his liquidated companies would be of interest to the National Enforcement Unit, in particular the Investigator – Director Prohibitions and Criminal Breaches of the Companies Act 1993.
Sources:
Companies Act 1993 No 105 (as at 30 September 2009) Public Act
http://www.legislation.govt.nz/act/public/1993/0105/latest/DLM323263.html
http://www.lawyerinauckland.com/documents/blog.php?entry_id=1248801663
Sex swells the kitty. By Deborah Hill Cone Friday 2nd November 2001
http://www.sharechat.co.nz/article/d597b4ad/sex-swells-the-kitty.html
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