Services: Banking & Finance, Corporate & Commercial, Restructuring & Insolvency
Industry Focus: Financial Services

The July 2016 issue of Governance Directions, the official journal of Governance Institute of Australia, featured an article by Macaire Bromley titled 'From conservatism to entrepreneurship in the boardroom: safe harbour reform proposals revealed'. A PDF version can be found here.

In this article Macaire explores the Turnbull government's Proposals Paper on Improving Bankruptcy and insolvency laws, released in April 2016 as part of its National Innovation and Science Agenda.

Macaire provides an overview of the two alternative formulations that have been proposed to establish a safe harbour for directors and:

  • explains the key differences between Model A (which would operate as a defence to insolvent trading) and Model B (which would constitute a proposed variation to the operation of the insolvent trading provision itself)
  • highlights the key elements shared by both Model A and Model B, being that:
    • a director will not be liable for debts incurred while the company is insolvent if the director is taking reasonable steps to return the company to solvency within a reasonable period of time
    • the company must appoint a restructuring adviser to give advice about the reasonable steps to be taken to return the company to solvency within a reasonable period of time
    • explains why, from the perspective of a company director, Model B is likely to be preferable to Model A
    • highlights the steps that directors can and should take now to ensure they are prepared for whatever shape the reform might take.

To access the article please click here.

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article. Authors listed may not be admitted in all states and territories