Safe Harbour provides a statutory defence for company directors against insolvent trading liability under section 588GA of the Corporations Act 2001. It allows directors to continue trading while developing a genuine restructuring plan, provided they meet specific eligibility criteria and act diligently throughout the process.

To be eligible for Safe Harbour protection, directors must:

• Ensure that employee entitlements (including superannuation) are paid up to date,

• Ensure that tax lodgements are up to date (although payment can be outstanding),

• Maintain proper books and records,

• Engage one or more appropriately qualified advisors early,

• Develop and implement a restructuring plan that is likely to deliver a better outcome than an immediate appointment of an administrator or liquidator.

The Safe Harbour defence is not automatic. Directors must demonstrate that they took steps reasonably likely to lead to a better outcome for the company and its stakeholders. It is also a forward-looking test that must be reassessed over time, particularly if circumstances change.

Typical restructuring plans may include:

• Operational or financial restructuring,

• Debt negotiations or forbearance agreements,

• Asset divestments or business unit sales,

• Capital injections or recapitalisation plans.

Directors remain in control of the company throughout the process, but must act transparently and take reasonable steps to ensure the ongoing viability of the business. If the restructuring effort fails or ceases to be viable, formal insolvency options may still be required.

Helios Advisory provides discreet, qualified support to directors seeking to rely on Safe Harbour protections. We work alongside legal and financial advisers to document the process, test the viability of restructuring strategies, and help ensure that directors comply with the obligations necessary to rely on the defence if required.