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Protect Your Business Future With Safe Harbour
Strategic Shield for Directors
Introduced under Section 588GA of the Corporations Act 2001, Safe Harbour is an informal restructuring process that allows directors to address financial challenges without the immediate risk of personal liability for insolvent trading.
Expert Guidance With Real-World Impact
At Olvera Advisors, we help directors use Safe Harbour as a proactive strategy. Our tailored plans aim to protect reputations, preserve value, and create space for business recovery.
Recovery Starts with Early Action
If your business is facing uncertainty, early access to Safe Harbour could determine whether you recover — or lose control.
Independent Specialists
We assign a team of specialists to each advisory project, empowering our clients with the right advisory experience and knowledge.
Olvera Guides
Safe Harbour Advisory Guide
Download Olvera’s safe harbour advisory guide for an informative overview of our offerings and industry experience.
Our Experts
Your Safe Harbour Experts
Our team of specialist advisors are dedicated to providing expert guidance and personalised solutions for your business.
Kate Barnet
Kate Barnet is a recognised leader in the insolvency and reconstruction industry.
Michael Billingsley
Michael offers over two decades of international restructuring expertise, adept at innovatively supporting diverse businesses, from small firms to listed companies.
FAQs
Frequently Asked Questions
Get answers to common questions about Safe Harbour.
What are Safe Harbour Provisions?
Safe Harbour Provisions were introduced in 2017 and are part of the Australian Corporations Act. They aim to foster a culture of restructuring instead of an insolvency regime that imposes stern penalties on directors who continue to trade a company during its insolvency.
Essentially, Safe Harbour protects directors against the statutory duty that prevents a company from trading while insolvent. This is significant as insolvent trading can expose directors to civil or criminal penalties, bankruptcy, and loss of personal assets.
Is my business eligible for Safe Harbour?
Companies are eligible for the Safe Harbour Provisions to absolve any personal liability if:
- Employee entitlements (including superannuation) are paid up to date
- The company has maintained and lodged all notices and reporting obligations under tax law
What is insolvency under the Corporations Act?
Under the Corporations Act, a company is considered insolvent when it is unable to pay its debts when they are due. The Act imposes a duty on directors to prevent the company from incurring debt, and those who fail this duty may face serious consequences, such as civil penalties, compensation orders, or even criminal charges.
How does Safe Harbour Provisions change insolvency?
The threat of insolvency laws and the uncertainty of insolvency often cause directors to seek voluntary administration prematurely, even when the company has the potential for long-term viability. The Safe Harbour Provisions in the Corporations Act were created in recognition of this detriment.
Safe Harbour is designed to drive a cultural change. It encourages directors to keep control of their company, engage with stakeholders early, and focus on turnaround efforts instead of hastily placing the company into voluntary administration.
What are the benefits of Safe Harbour Provisions?
The Safe Harbour Provisions offer many benefits, including:
- Risk mitigation – Company directors can better protect their personal liability while restructuring by engaging with Safe Harbour advisors. It also allows them to take calculated risks without a looming threat of severe penalties in insolvent trading.
- Confidential – Safe Harbour Provisions arrangement is not required to be disclosed outside the company board, such as ASX and public markets. This protects the company’s reputation and enterprise value.
- Supports turnaround & viability – By promoting a culture of restructuring and turnaround, company directors can better support their long-term organisational viability and preserve its value.
- Control – The company board remains in control of the process with the support of experienced professionals.
- Win-win – Safe Harbour prevents premature voluntary administration for the business and protects their employees, while potentially offering a better return for creditors and shareholders.
- Innovation: Without the fear of insolvency, Safe Harbour Provisions promote a culture of entrepreneurship and innovation, contributing to a more resilient and dynamic corporate landscape in Australia.
What is the “better outcome” concept in Safe Harbour Provisions?
The “better outcome” concept is a pivotal aspect of Safe Harbour Provisions. It means that directors will be given a safe harbour from civil insolvent trading provisions if they start developing one or more courses of action that could lead to a better outcome for the company. This ‘better outcome’ essentially means better than the immediate appointment of an administrator or liquidator.
The Safe Harbour protection applies to company directors even if the plan fails. However, certain conditions need to be met for the provisions to apply, such as timely implementation of the plan and the continuous assessment of its viability.
Are there any conditions that must be met under Safe Harbour Provisions?
Yes. Company directors must document and follow a structured plan that’s aimed at a better outcome for the company and comply with all legislation conditions. Company directors who wish to be protected under Safe Harbour Provisions must also meet the following conditions:
- Be incurring debt directly or indirectly with a proposed course of action.
- Ensuring that the company continues to pay all employee entitlements, including superannuation, as they are due.
The legislation also specifies factors that a court may consider in determining if a director’s course of action is likely to lead to a better outcome. These factors include, but are not limited to:
- Properly informing oneself of the company’s financial position.
- Taking steps to prevent misconduct.
- Keeping appropriate financial records.
- Obtaining advice from an appropriately qualified entity.
- Developing a restructuring plan.
Where should I go for Safe Harbour advice?
Safe Harbour Provisions and the Corporations Act have a complex set of rules, so it is vital for directors to seek advice from qualified professionals. Engaging with a registered liquidator who is well-versed in insolvency laws and Safe Harbour Provisions can offer invaluable guidance and support.
The team at Olvera Advisors specialise in providing Safe Harbour insolvency advice, helping directors navigate the intricacies of the Corporations Act and developing strategies that comply with Safe Harbour Provisions.
Learn How Safe Harbour Can Safeguard Your Business
Take the first step toward stability. Download our free guide or speak with an expert to see if Safe Harbour is right for your business.
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