Instead of prematurely entering into administration or liquidation, reforms to the Corporations Act now provide Directors with alternate protection against personal liability for insolvent trading.

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Known as “Safe Harbour”, it provides the much-needed breathing space for Directors to properly and adequately determine and assess all of a Company’s viable options during a period of financial difficulty.

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Australia’s insolvent trading laws are amongst the harshest in the world. They expose Directors to personal liability along with risks of civil financial penalties of up to $200,000. Compensation proceedings may be initiated by ASIC, a liquidator or creditors for potentially unlimited amounts.

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Where there is a suspicion of insolvency, Directors have a legal duty to act in the interest of creditors. Proper and responsible decision making may prove difficult for Directors during this time.

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Appointing an appropriately qualified restructuring advisor under Safe Harbour is a prudent first step to ensure Directors are protected and that all options can be properly considered.

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The Safe Harbour reforms seek to encourage an orderly and proactive restructuring during financial uncertainty to avoid a formal insolvency process, which can be a destructive and litigious minefield.

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Unlike an insolvency appointment, Safe Harbour and restructuring do not require public notifications or notices - it is a private commercial arrangement with Directors maintaining control.

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When done correctly, Directors will not be personally liable for debts incurred after the date of insolvency if it can be demonstrated that they were in connection with a proper restructuring plan which is reasonably likely to lead to a better outcome than an immediate insolvency appointment.

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Having over 30 years’ experience in insolvency, restructuring and advisory, Mark Levi leads the team at Titanium Corporate Advisory - a highly qualified specialist restructuring practice with extensive Safe Harbour expertise.

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Partnering with the company’s lawyers, accountants and other advisors we specialise in the design and implementation of Safe Harbour Restructuring Programs that save businesses.

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Where a restructuring plan is not viable, or the conditions for Safe Harbour cannot be met, we have a panel of insolvency practitioners and lawyers whom we refer and work with, when necessary.