Insolvency Legislation Reforms – Safe Harbour & Ipso Facto
Key Legislation changes have been introduced whereby ‘’safe harbour’’ protects company directors from personal liability for financially distressed/insolvent trading companies
Directors are to ensure they have developed a course of action which are reasonably likely to lead to a better outcome for the company and its creditors rather than triggering immediate administration or liquidation.
There is also another layer of legislation which prevents contractors terminating supply and other contracts with the business during the restructuring period, under what are called “ipso facto” clauses.
The objective for the reforms are to encourage company directors to engage early with financial hardship, keep control of their companies and take reasonable steps to pursue a corporate restructure.
It’s also intended to provide a better opportunity for companies to restructure and trade through financial difficulties, when they may have otherwise entered into liquidation or external administration.
Feel free to call us where we can run you through what type of Credit Impaired Loans / Debt Solutions we can offer.
Further Information on Safe Harbour and Ipso can be found on Australian Government legislation link below.
Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Act 2017
https://www.legislation.gov.au/Details/C2017A00112
J.O.
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