Business Bytes - How Your Business Can Find Safe Harbour
Sydney special counsel, Zina Edwards, explains the new Safe Harbour provisions and how they operate in respect of financially distressed companies.
On the 18th September this year the new safe harbour laws commenced. The aim of the new laws is to allow directors of financially distressed companies some breathing room to explore consensual restructuring options outside the formal insolvency regimes.
So for companies facing financial uncertainty these new laws will provide valuable time to explore options such as consensual restructuring, operational turnaround, potential new sources of funds and therefore have the potential to preserve value for all stakeholders.
Companies seeking the protection of safe harbour need to comply with certain threshold obligations such as the payment of employee entitlements and tax reporting. So for any company it's important the obligations are complied with so that if there is any financial hiccup down the road all options are open to the company. However if you're a director that’s facing potential insolvency issues the most important thing to do is to get advice in a timely manner so that all the options are open to you.