Safe Harbour Legislation and Navigating the Corporate Turnaround Process

1 min read

Having recently had the privilege of attending Shaw Gidley’s seminar on the new Safe Harbour legislation, here’s a few of the key points that PBL got out of what was an excellent presentation.

On 18 September 2017 a major reform to Australia’s insolvency laws was passed through Parliament and given Royal Assent, meaning that Australia finally offers protection for directors from insolvent trading where appropriate actions are taken.

The recent changes now provide a carve out mechanism from the current insolvent trading regime, allowing directors to continue to operate an insolvent (or suspected insolvent) company, without risk of being personally held liable.

To put it simply, you can now avoid being penalized personally for suspected insolvent trading provided you meet the criteria of the turnaround process.

There are several eligibility criteria that must be met in order to garner this protection:

  1. You must conduct a review of the company’s solvency, and the director must seek advice as required without also incurring new debts. This step must be clearly documented;
  1. Secondly, you must engage ‘appropriately qualified entities’, assess your eligibility and consider standstill agreements, and again, you must document your attempts at engaging qualified entities for advice;
  1. Implement a business strategy that is focused on stabilisation and cash management, as well as formulating a turnaround plan for which the advisors approve, and think will provide a better outcome;
  1. Conduct regular meetings to monitor the plans progress as well as continue to maintain financial records and compliance with all director’s duties and tax reporting/employee entitlements; and
  1. Finally, assess whether the company is solvent or whether formal insolvency appointment is required, and understand that Safe Harbour protection ceases when the turnaround plan stops being likely to lead to a better outcome.

Remember, the key takeaway is to note that if it is not documented, then it did not happen. Each of these stages must be clearly documented in order to ensure that the criteria are met. For further information on the Safe Harbour protections and whether or not your business is in need of a turnaround plan, please contact Shaw Gidley Insolvency Reconstruction.

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Picture of Authored By<br>Reuben Hernandez

Authored By
Reuben Hernandez

Director Lawyer, PBL Law Group

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Anita Bradley has been an absolute dream to deal with. Anita's conveyancing skills and knowledge knows absolutely no boundaries along with her effective communication skills which has made selling and buying a completely stress free exchange for us. We recommend PBL Law to everyone looking for outstanding service. We will definitely be returning clients.
Kushlan Aluwihare
PBL Law Group were fantastic. Anita from PBL worked with us closely during our property search and made the exchange and settlement process smooth and stress free. Highly recommended.
Gail Whitford
PBL handled my late mothers estate, they were very obliging and patient with any and all questions that we had, thank you to David , Sharon and the other staff that we dealt with, everyone was so easy to talk to and friendly .David came to the home where my Mother was living and helped her to get her will in order, Sharon helped us through the process of executing her wishes when the time came even doing a house call which was so much easier, thank you all so much
S M
I have experienced an excellent service from PBL (especially from Anita) during the sale of my recent property on Central Coast, and during the purchase of our current property in Sydney. Throughout many challengers, especially with the sale, Anita presented her very professional and knowledgeable conveyancer, positively solving all obstacles. "Above and Beyond" Award going to Anita!!! :-)
Amanda Reitzin
The five-star reviews are well-deserved. I needed a motion and a bylaw drawn up for urgent repairs of my strata unit and the AGM was in two weeks' time. My solicitor was friendly, efficient, knew what documents to ask for, and had all the paperwork prepared well within the timeframe. She also took the time to run through all the legalese and the different possible scenarios with me to make sure I understood. I am so glad to have found this firm and I will not hesitate to use their services again in future if the need arises.
Ricky Cooper
Anita is amazing! So attentive, approachable and communicates everything every step of the way. I have now bought and sold property with Anita and I cannot recommend her highly enough.
Ron Thomsen
Our Commercial Property conveyancing was handled very professionally. Anita’s experience and responsiveness was an asset in this transaction.
Trace M
I am so grateful for Anita Bradley from PBL Law Group helped me with this property settlement, she has went above beyond to ensure I understand everything because of our deafness. I will recommended Anita or their team. Thank you so much for all the hard work you have done for us.
Tricia Wheatstone
For almost 18 months I have been a client of Alex Ilkin. Alex is very knowledgeable and professional and has consistently provided me with thorough, honest and well set out advice, including steering my case through appeal proceedings. He always worked for my best interests with integrity and compassion. I recommend Alex and his team at PBL.