The Australian Restructuring Insolvency & Turnaround Association (ARITA) has released their one-page fact sheet on Safe Harbour for Company Directors, encouraging ARITA members to use this document for the promotion of their services.
The guidance fact sheet effectively summarises the steps to be taken by Directors, and is sub-titled "How to protect yourself if your business is in financial distress".
As has been covered in greater detail in the BRI Ferrier Harbour Masters 'white paper', available for download here, the steps are:
1. Get your accounts and records in order
This first step is obviously key - without knowing where the Company's money is coming from and going to, as the fact sheet asks, how can you have a viable plan to turn things around? In addition, a Director must understand liabilities and ensure that staff entitlements are paid up to date. Without this, the Safe Harbour protections for Directors won't apply.
2. You must get expert help
Here the Director would need to seek advice from an appropriately qualified adviser. Perhaps understandably, ARTITA defines this class of adviser to be "ARITA Professional Members".
On this point, even though we are ARITA Members, we take a slightly different approach; we would work with a Company's or Director's accountant, who may not likely be an ARITA Professional Member. In this way, by working with the business and its trusted advisers, BRI Ferrier can add value to the Safe Harbour process without adding time or unnecessary costs.
3. You must properly inform yourself of your company's financial position
By understanding the company's financial position, based upon advice from the qualified adviser, the Director(s) can better assess the available options. If at least one option is 'reasonably likely to lead to a better outcome' than voluntary administration or liquidation, the Director must choose the next step.
Timeliness of reports is something that we see as key to this step as regards the overall success or not of Safe Harbour for a Company and its Director(s). As such, in conjunction with a software provider, we have developed a tool that will vastly expedite the financial analysis and reporting of any electronic database of a company's financial records. In doing so, and by analsying the data using sophisticated metrics and industry benchmarks, we offer a service that allows a Director to make better decisions faster.
Often, when a business is failing and flailing, time is a nice luxury. Contact us to discuss how our software solution can help you/your clients.
4. Develop and implement a restructuring plan for the company
As the final step in the Safe Harbour protections process, the Director must have a properly documented restructuring plan for the company. The steps in the plan then obviously need to be fully implemented and actioned, or actioned to the extent that the company's position allows.
As a final consideration, the fact sheet briefly addresses the question of "What happens if the restructuring plan fails?". Unless the Company can be sold or recapitalised, the options of placing the company into voluntary administration or liquidation would likely be taken.
You can have a read of ARITA's fact sheet here.