Practical Law Insolvency and Restructuring has recently published a new Practice note, Safe harbour: a best practice guide for directors, authored by Macaire Bromley, Executive Director NSW, Vantage Performance.

The note is designed to provide guidance for directors seeking safe harbour protection from insolvent trading liability. It considers the purpose and intent of the safe harbour framework in section 588GA of the Corporations Act 2001 (Cth), the elements of the safe harbour and the scope of its effect and duration, and practical steps directors should take to ensure that they secure safe harbour protection. It also considers how directors discharge the evidential burden when relying on safe harbour, particular issues relevant to corporate groups of companies (including where a holding company seeks safe harbour protection in respect of a subsidiary) and continuous disclosure obligations of ASX-listed companies whose directors seek to implement a turnaround within the safe harbour framework.

This new resource is the most comprehensive of its type in market and should be of particular interest to directors of companies in financial difficulties, given that the Federal Government’s temporary insolvent trading relief (introduced to mitigate the economic impact of the 2019 novel coronavirus disease (COVID-19)) will end on 31 December 2020. It is critical that directors come to grips with the safe harbour framework and how it operates practically before 1 January 2021.

Subscribers can access the Practice note from Practical Law's Insolvency and Restructuring, Company Law or Banking and Finance resource pages. For more information or to discuss a subscription to Practical Law, please contact Laura Hawes, Head of Dispute Resolution, Insolvency and Restructuring.