The consumer watchdog has won court approval to continue its action against a defunct vocational education provider accused of misleading vulnerable members of the community into signing up for appropriate courses.

The Federal Court on Friday decided to permit the Australian Competition and Consumer Commission to pursue the Phoenix Institute for penalties despite it not technically being a creditor to the parent of the company, Australian Careers Network, which collapsed in 2015.

About 20 officers raided the Australian Careers Network head office in Spotswood earlier this year. Credit:Vince Caligiuri

The ruling is important as it stops companies trying to avoid prosecution by regulators by placing themselves into administration and then being shortly after resurrected through a deed of company arrangement.

"If the allegations made by the ACCC are established, the respondents sought to procure a very substantial sum of up to $360 million from public revenue through misleading, deceptive and unconscionable conduct," Justice Melissa Perry said.