Oftentimes, company directors and their advisors file for voluntary administration when their business may yet be recovered. This puts directors at more risk and increases their personal exposure to damages if they continue to trade.
Safe Harbour is an informal restructuring process that encourages directors of companies to proactively address issues while offering them personal protection. Introduced in Section 558G of Australian Corporations Act in 2017, Safe Harbour Provisions serve as a quasi-defence for company directors, protecting them against the statutory duty that prevents companies from trading while insolvent.
As advisors with strong industry portfolios, Olvera Advisors provides tailored advice that helps companies avoid insolvency where possible. Our expert team offers strategic guidance on utilising Safe Harbour provisions, minimising your risks and potentially recovering your business without entering voluntary administration.
For companies in financial distress, Safe Harbour is an informal restructuring process that allows directors to stay at the helm of their organisation when implementing a restructuring plan.
Olvera’s Safe Harbour efforts can be effectively done together with company directors and advisors while mitigating the consequences of insolvent trading. Our experience and knowledge of the Corporations Act 2001 offer directors numerous benefits during periods of insolvency.
Risk Mitigation: Safe Harbour offers a level of comfort to directors against any personal liability risk during a restructure.
Control: The organisation board remains in control of the process with the support of our experienced professionals.
Confidential: Safe Harbour is a strictly confidential process that protects a company’s reputation and enterprise value.
Director Compliance: Safe Harbour allows directors to avoid severe penalties as a result of insolvent trading, preserving their name and personal assets.
Qualified Support: Directors and their advisors will receive accurate and professional advice from the Olvera team in effectively utilising Safe Harbour.
Business Viability: Safe Harbour supports long-term organisational viability and value retention, instead of prematurely placing the company into administration
Safe Harbour is suited for businesses with one or more of the following concerns
Olvera Advisors has helped numerous company directors and their advisors to restructure with Safe Harbour Provisions. Our services include
Assessing and reviewing eligibility criteria to ensure the company meets Safe Harbour requirements effectively.
Creates and implements a detailed restructuring plan aligned with company goals.
Identification and agreement on critical milestones, guiding the restructuring plan toward successful outcomes.
Offering board advisory support and track milestone progress to ensure plan adherence and success.
Download Olvera’s safe harbour advisory guide for an informative overview of our offerings and industry experience.
Our team of specialist advisors are dedicated to providing expert guidance and personalised solutions for your business.
Kate Barnet is a recognised leader in the insolvency and reconstruction industry.
Michael offers over two decades of international restructuring expertise, adept at innovatively supporting diverse businesses, from small firms to listed companies.
Get answers to common questions about Safe Harbour.
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.
Companies are eligible for the Safe Harbour Provisions to absolve any personal liability if:
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.
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.
The Safe Harbour Provisions offer many benefits, including:
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.
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:
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:
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.
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