Harbour Masters - safe harbour & restructuring blog

Welcome to Harbour Masters, where we offer insights and updates on the expertise and guidance available for the Directors of companies in need of advice in the face of stiff trade winds. Our updates focus on the critical business topics of restructuring, turnaround, and the availability of the new 'Safe Harbour' provisions, all designed to help companies renew, restructure, and rebuild. 

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Potential implications for Directors

18-Oct-2017 11:11:00 / by Stuart Otway posted in Safe Harbour, Directors

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In our opinion, the safe-harbour laws are best suited to circumstances where directors identify that their company is insolvent or likely to become insolvent at an early stage. This gives them the opportunity to develop a restructure plan that enables a director to rely on the safe harbour laws, in case the plan ultimately fails.

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Potential implications for creditors

03-Oct-2017 10:24:00 / by Stefan Dopking posted in Safe Harbour, Creditors

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There is no restriction on a creditor to start recovery action against the company and director (if a personal guarantee was provided). This might include applying for the winding up of the company during safe harbour. As part of the restructure plan, the company shall be required to manage creditor claims to avoid such recovery actions.

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Who will seek Safe Harbour?

28-Sep-2017 09:46:00 / by Stefan Dopking posted in Safe Harbour, Users

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While all directors may use safe harbour, it is more likely to be used by medium to large sized corporations.

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Safe Harbour - what is it?

15-Sep-2017 16:42:00 / by James Koutsoukos posted in Safe Harbour, Directors

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Under the Australian Corporations Act 2001 (Cth) Legislation (s.588G) a director has a duty to prevent their company continuing to trade whilst insolvent (“insolvent trading”).

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Key Steps of the Safe Harbour process

13-Sep-2017 14:20:00 / by Stefan Dopking posted in Safe Harbour, Process

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Directors who take up safe harbour will need to ensure that appropriate steps have been taken for the company to comply with its obligations. Here is a potential framework that could be used to document, implement and monitor the safe harbour process:

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Update: Bill passes

12-Sep-2017 15:34:00 / by James Koutsoukos posted in legislation, Safe Harbour

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The Treasury Laws Amendment (2017 Incentives No 2) Bill 2017 has earlier today passed both houses.

The bill amends the Corporations Act 2001 to create a safe harbour for company directors from personal liability for insolvent trading if the company is undertaking a restructure outside formal insolvency.

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Safe Harbour sails through Parliament

24-Aug-2017 15:03:00 / by Michelle Shackles posted in legislation, Safe Harbour

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As previosuly reported, the 'Safe Harbour' law reform aims to create a cultural change among company directors.

It encourages Directors to retain control of their company, engage early with appropriate professional advisers and take considered, reasonable risks to facilitate the company’s recovery rather than prematurely deciding on a formal appointment.

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Legislative aims

27-Jun-2017 10:28:00 / by Peter Krejci posted in legislation, Safe Harbour

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The legislation addresses the problems for directors that arise when they learn about their company’s financial difficulties. The reforms provide a period of “breathing space”. During this time, directors will, with the assistance of professional external advisers, be able to work through a plan or plans for the turnaround of the company. The breathing space is not “carte blanche”. As outlined below, to benefit from the safe harbour laws, directors will need to comply even more rigorously with some requirements than would be the case for a solvent company. Such requirements may include the lodgement of Activity Statements and adherence to principles of proper corporate governance.

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Safe Harbour and Ipso Facto Clause reforms in corporate insolvency laws: a Safe Harbour or Pirate Cove?

19-Apr-2017 14:03:00 / by Moira Carter

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The Government’s release of draft legislation to addressing the Safe Harbour and Ipso Facto Clause reforms mooted in last year’s Innovation Statement prompts us to ask: will the legislation go beyond what is necessary to protect directors from prosecution while they are restructuring a business to provide an opportunity for unqualified advisors to take unfair advantage of creditors?
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