Safe harbour

Safe harbour refers to provisions in Australian insolvency law that can protect a director from personal liability for insolvent trading while they are developing and implementing a genuine course of action reasonably likely to lead to a better outcome for the company than immediate administration or liquidation. Safe harbour is a legal protection with specific, strictly applied conditions, including that the company must be keeping proper records and meeting its tax reporting obligations, and directors relying on it should be working closely with a qualified insolvency or restructuring adviser throughout, not treating it as an informal grace period.⚠ For a company genuinely pursuing a turnaround, a debt restructure or workout facility can be part of the course of action a director points to in support of a safe harbour position, alongside operational changes and stakeholder negotiations. Because the protection depends entirely on the specifics of what is done and documented, directors should never assume safe harbour applies without direct professional advice on their situation.

Related

Debt restructure & workout loans · Liquidation · Receivership