ASIC’s First Criminal Creditor-Defeating Charge: What Every Australian Director and Business Owner Must Know

On 30 June 2026, ASIC announced a landmark enforcement action that every Australian director, company officer, and business owner should be paying close attention to. For the first time in Australia’s legal history, ASIC has brought a criminal charge under the creditor-defeating disposition laws — a regime introduced specifically to target the kind of conduct that strips value from a failing company before creditors can get to it.

This is not merely a regulatory update. It is a statement of intent from Australia’s corporate regulator: where directors or their associates move assets out of an insolvent company to defeat creditors, ASIC will pursue them through the criminal courts.

What Happened

ASIC Media Release 26-139MR, published 30 June 2026, confirmed that Giuseppe DeFrancesco of Harrington Park NSW has been charged with three criminal offences arising from his conduct as an employee of Camden restaurant Jasa Dining Pty Ltd (trading as The Italian Food Project), which is now in liquidation.

The charges are:

1. Dishonest use of position (s184(2), Corporations Act): ASIC alleges that between 17 August 2023 and 5 April 2024, DeFrancesco dishonestly used his position as an employee to redirect $935,000 in proceeds from the sale of Jasa Dining to himself, to the detriment of the company’s creditors. Maximum penalty: 15 years’ imprisonment.
2. Criminal creditor-defeating disposition (s588GAC(1), Corporations Act): ASIC alleges that between 10 April 2024 and 22 April 2024, DeFrancesco procured, incited, induced, or encouraged Jasa Dining to redirect a further $96,793 in sale proceeds contrary to the creditor-defeating disposition laws, while the company was insolvent. Maximum penalty: 10 years’ imprisonment.
3. Witness tampering (s37(3), Crimes Act): It is alleged that DeFrancesco offered $50,000 to a person to induce them to withhold true testimony in a federal judicial proceeding.

The matter was heard in the Downing Centre Local Court and adjourned to 11 August 2026 for further mention. The case is being prosecuted by the Office of the Director of Public Prosecutions (Cth).

ASIC’s media release confirmed explicitly: “This is ASIC’s first charge brought under the criminal creditor defeating disposition legislation.”

What Are Creditor-Defeating Dispositions?

The creditor-defeating disposition regime was introduced into the Corporations Act 2001 (Cth) as part of Australia’s anti-phoenixing reforms that took effect in 2020. The laws sit in Part 5.8A of the Corporations Act and create both civil and — as this case confirms — criminal consequences.

A creditor-defeating disposition (defined in s588FDB) occurs when a company disposes of property:

• for less than the lesser of the market value of the property or the best price reasonably obtainable for the property; and
• in a way that prevents, hinders, or significantly delays that property from being available to benefit creditors in a winding up.

The duty to prevent such a disposition arises when a company is insolvent, or where a series of dispositions renders it insolvent.

Under the criminal arm of the regime (s588GAC), criminal liability extends not just to the company’s directors but to any person who procures, incites, induces, or encourages the company to make such a disposition. This is the provision ASIC has now charged under for the first time.

ASIC also retains civil powers: under s588FGAA, it can make orders to unwind creditor-defeating dispositions in companies that are subsequently wound up.

Why This Is a Landmark Moment for Directors and Business Owners

Before this case, Australia’s creditor-defeating disposition regime existed primarily as a civil enforcement tool. Liquidators could seek to set aside transactions, and ASIC could apply for court orders. The criminal pathway existed on paper but had never been activated — until now.

This matters for several reasons:

1. ASIC Is Sending a Direct Message to Directors

In the same week that ASIC laid this charge, it also filed new Federal Court proceedings against directors and compliance committee members of Keystone Asset Management over the alleged misappropriation of $305 million from the Shield Master Fund. ASIC’s enforcement machine is operating at record pace in 2026, and the creditor-defeating charge signals that the regulator is now prepared to use every tool available to it — including criminal prosecution.

ASIC’s Deputy Chair, Sarah Court, has been explicit about the regulator’s priorities: “We want directors of businesses that are struggling to pay invoices to know that we are watching. The small business owners who are left unpaid are the lifeblood of this economy.”

2. The Net Is Wider Than You Think

The creditor-defeating disposition criminal offence under s588GAC(1) is not limited to company directors. It catches anyone who procures, incites, induces, or encourages the relevant disposition. That can include:

• Senior employees (as in this case — DeFrancesco was an employee, not a director)
• Accountants or financial advisers who structure transactions knowing the company is insolvent
• Legal advisers who assist in asset transfers
• Associates of directors who receive diverted funds
• Related entities that acquire company assets below market value

ASIC’s own guidance explicitly states: “This duty extends to other people who may be involved in or encourage such a disposition to take place, including pre-insolvency advisers, lawyers or others who assist or advise directors to undertake such a disposition.”

3. This Is Closely Connected to Illegal Phoenix Activity

The creditor-defeating disposition regime was designed specifically to combat illegal phoenixing — where assets are stripped from an insolvent company and transferred to a new entity (often owned by the same principals) while creditors are left behind. If your company is in financial distress and assets are being moved to a related party or sold below market value, this legislation is directly relevant to you.

In Queensland, the construction sector has seen persistent phoenixing issues for years. The ATO and ASIC have both identified the construction industry as a high-risk area for illegal phoenix activity, with subcontractors and trade creditors among the most common victims. For more on how Boss Lawyers handles these matters, see our Building and Construction disputes practice and our Insolvency and Restructuring practice.

What This Means for Directors, Officers, and Business Owners

If your company is experiencing financial difficulty, or if you are a creditor of a company in distress, this case is directly relevant to you. Here is what you need to understand:

If You Are a Director or Officer of a Company Under Pressure

• Do not transfer assets out of the company at less than market value once the company is insolvent or approaching insolvency. This is not just a bad idea — it is potentially a criminal offence with a 10-year maximum jail term.
• Do not redirect sale proceeds to yourself or related parties while the company has outstanding creditor obligations. The dishonest use of position offence under s184(2) carries a 15-year maximum penalty.
• Get advice immediately if you are considering any asset transactions involving an insolvent company. Engaging a restructuring or insolvency lawyer before acting can be the difference between lawful restructuring and criminal liability.
• Document every board decision about asset disposals. The paper trail matters enormously in defending any ASIC investigation or court proceeding.
• Consider your safe harbour obligations: Australia’s safe harbour provisions under s588GA of the Corporations Act allow directors to shield themselves from insolvent trading liability if they are taking proper restructuring steps. This protection does not extend to creditor-defeating dispositions.

If You Are a Creditor of a Company in Distress

• If you suspect a company that owes you money has been stripping assets, you should engage a commercial litigation lawyer promptly. The liquidator has powers to challenge creditor-defeating dispositions and recover those assets for distribution to creditors.
• ASIC can also make orders under s588FGAA to restore the position, but this is most effective when pursued quickly after liquidation.
• Document any suspicious transactions you are aware of and report them to the liquidator or ASIC.

Lessons and Action Points

The DeFrancesco charge is a direct warning to everyone in corporate Australia. Here are the five key lessons:

1. The criminal pathway is now live. ASIC has broken the ice. Having used s588GAC(1) for the first time, it will use it again. Directors who strip assets from failing companies can no longer assume the consequences will be civil only.
2. Your role title is not a shield. DeFrancesco was an employee, not a director. If you encourage or assist a creditor-defeating disposition, you can be personally criminally liable regardless of your formal position in the company.
3. Timing matters: insolvency is the trigger. The duty arises when the company is insolvent. If you have any concern about your company’s solvency, get legal advice before making any asset transfers. The moment of insolvency can be contested — but ASIC will have access to the financial records.
4. Witness interference attracts its own serious consequences. The additional charge of offering $50,000 to suppress witness testimony should be a stark reminder that the cover-up is often as serious as the original conduct.
5. Act now, not when the letter arrives. ASIC investigations take time. By the time charges are laid, the regulator has been investigating for months or years. Directors in distressed businesses should seek legal advice at the first sign of financial difficulty — not after ASIC knocks.

How Boss Lawyers Can Help

At Boss Lawyers, we regularly act for directors, company officers, and creditors navigating the serious end of insolvency and corporate distress. Whether you are facing an ASIC investigation, a liquidator’s preference claim, or need to understand your obligations as a director of a struggling business, our team provides strategic, practical advice built on real courtroom experience.

If you are a director concerned about your company’s financial position, we can advise you on your obligations, the safe harbour provisions, and how to restructure your affairs lawfully. If you are a creditor who suspects asset stripping has occurred, we can advise on recovery options through the courts or via ASIC’s powers.

Learn more about our insolvency and restructuring services and our director disputes practice.

For strategic commercial legal advice, call Mark Harley on 1300 267 711 or contact us through our website.

Frequently Asked Questions

What is a creditor-defeating disposition under Australian law?

Under section 588FDB of the Corporations Act 2001 (Cth), a creditor-defeating disposition is a transaction where a company disposes of its property for less than market value (or the best price reasonably obtainable), in a way that prevents, hinders, or significantly delays those assets from being available to creditors in a winding up. The duty to prevent such transactions arises when a company is insolvent. Both civil and criminal consequences can flow from a creditor-defeating disposition.

Can I be personally criminally liable if I encourage a director to transfer assets out of an insolvent company?

Yes. Section 588GAC(1) of the Corporations Act creates criminal liability for any person who procures, incites, induces, or encourages a creditor-defeating disposition by a company that is insolvent. This is not limited to directors — it extends to employees, advisers, associates, and anyone who plays a role in bringing about the transaction. The maximum penalty is 10 years’ imprisonment. ASIC laid its first charge under this provision on 30 June 2026.

What should a director do if their company is insolvent and they are considering selling assets?

If your company is insolvent or approaching insolvency, you should obtain independent legal advice immediately before proceeding with any asset sale or transfer. Any disposal at less than market value while the company is insolvent risks being characterised as a creditor-defeating disposition. Lawful options may exist — including a Small Business Restructuring process under Part 5.3B of the Corporations Act, or a Voluntary Administration — and your lawyer can help you identify the safest path forward. Early action significantly improves your options and reduces personal risk.

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This article is general information only and is not legal advice. You should obtain professional advice specific to your circumstances before acting on any of the information contained in this article. The law described in this article is current as at 2 July 2026.

Mark Harley
Principal Solicitor | Boss Lawyers Pty Ltd
Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
T: 1300 267 711