3. Defining Insolvency Terms

Safe Harbour

The prohibition against insolvent trading (and associated compensation mechanisms) is subject to an important defence1 known as Safe Harbour: Corporations Act 2001 (Cth) section 588GA. Safe harbour legislation was designed to encourage companies in legitimate financial difficulty to undertake a restructure whilst providing protection for their directors from the risk of insolvent trading.

1 Safe Harbour is technically not a defence. Legitimate Safe Harbour eliminates the possibility of a director being considered liable for insolvent trading in a liquidation scenario.

The Importance of Proper Safe Harbour Advice
Video#3 Examples of Safe Harbour
Video#2 How Do You Implement Safe Harbour?
Video#1 Implementing Safe Harbour