WEXTED SAFE HARBOUR SUBMISSIONDownload PDF version
Wexted Advisors lodged a submission with the Treasury-appointed Panel reviewing the Safe Harbour Law. It addresses our experiences, client feedback, and areas for improvement of the regime.
The Law was introduced in 2017 following a decade of review into reform of insolvent trading, with a focus economic growth, job preservation, and striking balance between the impact of the law and promoting measured risk taking, to preserve equity value in businesses.
The submission responded to all questions posed by the Panel, supported by client case studies, each of which consented to the inclusion of their case study.
From our Submission:
- Safe Harbour has improved and legitimised restructuring – processes which are more effective in preserving jobs, businesses and equity value than insolvency.
- The law adds greatly to the credibility of and market confidence in restructuring processes.
- Its availability led to a better outcome for our clients. Without it, directors would have resorted to insolvency, with attendant loss of business value, jobs and equity.
- Director clients have developed a meaningful understanding of the elements of the business contributing to recovery along with the real impact of insolvency.
- The acceptance and stronger promotion of Safe Harbour is an important part of the post COVID-19 recovery process.
- Director and market education as well as guidance on use, and peak body support are the factors that will lead to increased utilisation of Safe Harbour.
Material change to the Safe Harbour Law is not warranted. We consider:
- The role of a Safe Harbour Advisor should be open to a range of experienced, qualified advisors, but the appropriately qualified entity for the purposes of Section 588GA(2) should be a Registered Liquidator.
- Requiring objective, financially based better outcome tests and the prescribed use of appropriately qualified entities for those tests will result in more defendable courses of action.
- Providing Safe Harbour or comparable advice must preclude the appointed Practitioner from accepting an insolvency appointment.
These points and others, as well as our case studies, are available in our submission, located here.