ASIC’s recent prosecution of a Sydney gym director is a timely warning for business owners who think they can simply “shut down” a company without properly addressing debts.
In this case, the director lodged a deregistration form stating the company had no liabilities. In reality, there were more than $70,000 owing to the ATO and a landlord. That single misstatement, whether careless or deliberate, was enough to secure a conviction under the Corporations Act. The outcome? A criminal record and a 12-month good behaviour bond.
On the surface, deregistration can look simple. Fill in a form, pay a small fee, and walk away. But as this case shows, when liabilities still exist, it’s not just a technicality, it’s a breach of the law. What seems like a shortcut can put you at personal risk, damage your reputation, and in some cases, end your career.
If you’ve ever thought, “Can’t I just close the business and move on?” you’re not alone. It’s an understandable thought when cash flow is tight and the pressure feels overwhelming. But when debts remain, tax arrears, lease obligations, supplier claims. “DIY exits” are a trap. Trying to save money by handling it yourself can end up costing far more in legal consequences.
This is why it’s so important to get specialist advice early. At de Jonge Read®, we help business owners understand the real options available. In many cases, deregistration isn’t even possible, and safer alternatives such as restructuring, voluntary administration, or a managed wind-down may deliver a far better outcome. More importantly, we make sure any path taken is compliant, defensible, and gives you a clear way forward.
The Sydney case is not unusual. ASIC is increasingly scrutinising directors who misrepresent company liabilities. Acting without advice exposes you to unnecessary risk. By seeking expert guidance before making a move, you protect yourself, your assets, and your future.
You don’t need to navigate this alone. Our no-cost, no-obligation advice will set out your risks clearly and provide you with a roadmap to move forward safely.
So if you’re thinking about “just closing the doors,” let this case be a warning, it’s the worst thing you could do on your own. The smarter step is to get advice first, so you know your options and can protect yourself and your family.
Did you know?
Phoenixing is another name of business restructure. Read more about business restructures and when this can be an option for you.
