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.
From enactment, being today, these laws can provide Directors with a defence to a claim for insolvent trading from a subsequently appointed liquidator where the directors access safe harbour provisions whilst undertaking a restructure.
Does my company qualify?
As a reminder, to be able to enter the safe harbour period, companies and their boards need to:
- have an actual suspicion of insolvency and be able to prove the basis of this suspicion. Directors cannot apply the safe harbour retrospectively. It can only be exercised upon execution of the restructure plan.
- have a plan that is “reasonably likely” to achieve a better outcome for the company than an immediate appointment of a voluntary administrator or liquidator.
- ensure that all entitlements to employees are up to date and paid when they fall due.
- ensure all statutory lodgements are up to date.