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
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
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,
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
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
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
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A recent NSW decision has implications for liquidators of trustee companies dealing with trust funds and priority debts.
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