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Safe Harbour - Restructuring Businesses out of the Spotlight
In a nutshell the Safe Harbour Pathways have been introduced to:
“ drive cultural change amongst company directors by encouraging them to keep control of their company, engage early with possible insolvency and take reasonable risks to facilitate the company’s recovery instead of simply placing the company prematurely into voluntary administration or liquidation.”
The emphasis is therefore finding solutions to enable businesses to continue and avoid collapse.
If all the Safe Harbour steps are put into the place, the legislation gives protection for Directors against Insolvent Trading Claims.
Safe Harbour is implemented outside of Formal Insolvency Arrangements (i.e. outside the appointment of a Liquidator, Administrator or Receiver).
See this Safe Harbour Brochure:
A Better Outcome for the Company and its Stakeholders
Safe Harbour commences when the Director implements a restructuring plan that is likely to be a better outcome for the company than an immediate formal insolvency.
In addition, for Safe Harbour to apply, the Director must:
Maintain proper books and records
Adhere to tax reporting obligations
Pay employee entitlements
It is also important to note that Safe Harbour protection does not apply to insolvent trading incurred prior to the commencement of Safe Harbour. This is an incentive for Directors to seek early help.
The Director is also encouraged to engage a properly qualified adviser to assist in carrying out the restructuring plan. Our business Greatworth Advisory undertakes informal assignments and includes a range of skills to solve critical problems and improve profitability and cash flow to rescue businesses.
Whilst safe harbour does offer some benefits to the Director, it is not of without risks. To find out if Safe Harbour is the right option for you or if a Formal Insolvency Arrangement such as Voluntary Administration is more appropriate to effect a Business Rescue, please contact Greatworth Advisory to arrange a meeting.