SAFE HARBOUR

GIVING BUSINESSES TIME TO RECOVER

 

In the most challenging moments, Safe Harbour gives companies and directors the time to develop a viable recovery strategy without the immediate appointment of an administrator or liquidator.

GET IN TOUCH

As the pre-eminent provider of Safe Harbour advisory services in the ANZ region — Wexted is on hand to develop and implement a robust turnaround plan designed to address the Better Outcome test and prevent the threat of insolvency. 

 

We’re able to support directors and management through the entire Safe Harbour process; from initial submissions to plan implementation.

EXPERTS

Wexted has been trusted to deliver crucial Restructuring & Turnaround services to significant public and privately listed companies.

Joseph Hayes

Joseph Hayes

5TH MAR 2024

Andrew McCabe

Andrew McCabe

5TH MAR 2024

Chris Johnson

Chris Johnson

5TH MAR 2024

Our strength is in the relationships we create with directors and management — working together to orchestrate viable actions and better outcomes.

OUR EXPERIENCE

Wexted has been trusted to deliver Safe Harbour services to major companies across multiple industries and sectors.

PROJECT LANIGAN

Safe Harbour

PROJECT LANIGAN

SAFE HARBOUR ADVISORS TO ASX LISTED FINANCE COMPANY FACING LIQUIDITY ISSUES DUE TO COVID-19.

PROJECT CRAIG - Safe Harbour Advisors

Safe Harbour

PROJECT CRAIG - Safe Harbour Advisors

SAFE HARBOUR ADVISOR TO A SIGNIFICANT STATE INFRASTRUCTURE PROJECT.

PROJECT FITZROY - Safe Harbour Advisors

Safe Harbour

PROJECT FITZROY - Safe Harbour Advisors

SAFE HARBOUR ADVISORS TO ASX LISTED INSURANCE COMPANY NEGATIVELY IMPACTED BY THE HAYNE ROYAL COMMISSION.

PROJECT GEORGE - Safe Harbour Advisors

Safe Harbour

PROJECT GEORGE - Safe Harbour Advisors

SAFE HARBOUR ADVISORS TO A SIGNIFICANT PRIVATE COMPANY OPERATING IN THE CIVIL ENGINEERING CONSTRUCTION SECTOR, PROVIDING PROFESSIONAL SERVICES ON RENEWABLE TECHNOLOGY PROJECTS.

PROJECT IVY - Safe Harbour Advisors

Safe Harbour

PROJECT IVY - Safe Harbour Advisors

WE WERE ENGAGED AS SAFE HARBOUR ADVISOR TO A DISRUPTIVE TECHNOLOGY AND NEXT GEN BUSINESS IN THE FAST-MOVING CONSUMER GOODS SECTOR. THE COMPANY HAD BEEN UNSUCCESSFUL IN A PROPOSED CAPITAL RAISE.

PROJECT KENT - Safe Harbour Advisors

Safe Harbour

PROJECT KENT - Safe Harbour Advisors

SAFE HARBOUR ADVISOR TO A PUBLICLY LISTED AUSTRALIAN HEALTHCARE COMPANY FACING LIQUIDITY ISSUES.

PROJECT NEWTON - Safe Harbour Advisors

Safe Harbour

PROJECT NEWTON - Safe Harbour Advisors

WE WERE ENGAGED AS SAFE HARBOUR ADVISOR TO AN OIL AND GAS EXPLORATION AND DEVELOPMENT COMPANY THAT HAD BEEN EXPERIENCING DIFFICULTIES IN MANAGING IT’S DEBT LEVELS TO IT’S SECURED CREDITOR.

PROJECT OAKWOOD - Safe Harbour Advisors

Safe Harbour

PROJECT OAKWOOD - Safe Harbour Advisors

SAFE HARBOUR ADVISORS TO AN ASX LISTED MANUFACTURING COMPANY. We provided safe harbour advice to a publicly listed manufacturing company as it sought to restructure several debt facilities, streamline operations and optimise working capital requirements. Our role included reviewing the short-term financial position of the company, assisting management with cashflow forecasts and modelling and developing a Corporate Structuring Plan.

PROJECT OXLEY - Safe Harbour Advisers

Safe Harbour

PROJECT OXLEY - Safe Harbour Advisers

WE WERE SAFE HARBOUR ADVISOR TO A START-UP TELECOMMUNICATIONS COMPANY FACING LIQUIDITY ISSUES.

PROJECT PITT - Safe Harbour Advisers

Safe Harbour

PROJECT PITT - Safe Harbour Advisers

SAFE HARBOUR ADVISOR TO AN UNLISTED PUBLIC COMPANY, WHICH WAS INVOLVED IN THE DEVELOPMENT OF ALTERNATIVE POWER TECHNOLOGY

PROJECT ROSE - Safe Harbour Advisers

Safe Harbour

PROJECT ROSE - Safe Harbour Advisers

SAFE HARBOUR ADVISOR TO A PUBLICLY LISTED GLOBAL FINANCIAL SERVICES COMPANY OPERATING IN THE MOBILE BANKING AND PAYMENTS PROCESSING BUSINESS.

 PROJECT SALFORD - Safe Harbour Advisers

Safe Harbour

PROJECT SALFORD - Safe Harbour Advisers

SAFE HARBOUR ADVISORS TO A LARGE PRIVATE INFRASTRUCTURE COMPANY NEGATIVELY IMPACTED BY VARIOUS CHALLENGES. WE ASSISTED THE BOARD TO CONSIDER A RANGE OF OPTIONS.

PROJECT BUFFALO - Safe Harbour Advisers

Safe Harbour

PROJECT BUFFALO - Safe Harbour Advisers

Our client, a medium sized retailer, was experiencing operating losses and a constrained cash flow as a result. We were engaged to provide commercial advice relating safe harbour protection for the directors and to help develop a turnaround plan to meet the better outcome assessment

SAFE HARBOUR EXPLAINED

The Safe Harbour provisions were introduced by the government in September 2017, protecting directors from insolvent trading. 

 

Since its introduction, it has become a vital safeguard for businesses and stakeholders. 

 

To be eligible for Safe Harbour protection, the company must satisfy the eligibility criteria:

 

Taxation obligations – the company’s tax reporting obligations are up to date; 

 

Employee entitlements – all obligations to employees, including superannuation, must be paid when they fall due; and 

 

Maintain adequate books and records – the company must have up to date records such that the directors can be properly informed of the financial position of the company.

FREQUENTLY ASKED QUESTIONS

Q.
What is safe harbour?

Safe Harbour provides directors protection from personal liability for trading whilst insolvent.  Safe Harbour applies to directors of companies that are developing a restructuring plan that is reasonably likely to provide a better outcome for the company relative to the immediate appointment of an administrator or liquidator.

Q.
Why was safe harbour introduced?

The Safe Harbour reforms seek to address a concern that the risk of personal liability for insolvent trading was causing directors to appoint external administrators prematurely, rather than to attempt a restructure of a viable business. The legislation seeks to strike a better balance between creditors’ interests and encouraging directors to manage challenging financial situations in a responsible and commercial fashion. The intention of the Safe Harbour reforms is to encourage proactive restructuring and entrepreneurship, and avoid formal insolvency processes, which can be needlessly destroy value.

Q.
Am I eligible for safe harbour?

Directors can access protections under Safe Harbour if they can demonstrate that they were developing or implementing a course of action reasonably likely to lead to a better outcome for the company than voluntary administration or liquidation.

In determining whether the above applies, Courts will have regard to whether a director is taking appropriate steps to:

  • inform themselves of the company’s financial position;

  • prevent misconduct by officers or employees;

  • ensure the company is maintaining appropriate financial records;

  • develop or implement a restructure plan; and 

  • obtain advice from an appropriate qualified entity.



     

Q.
Who is an appropriately qualified entity?

Key considerations when selecting an appropriately qualified entity include professional qualifications, independence, membership of an appropriate professional body and sufficient professional indemnity insurance to cover the advice being given. 

 

In line with guidance from the Australian Restructuring and Insolvency Turnaround Association we believe an appropriately qualified entity should be someone who can credibly test the Better Outcome against the counterfactual scenario – the appointment of an administrator or a liquidator.

Q.
Employee entitlements and tax thresholds

The Safe Harbour regime contains a number of checks and balances to protect the interests of employees and promote compliance with tax reporting requirements. 

 

In order to benefit from Safe Harbour protections, directors must ensure that all employee entitlements have been paid to date; such as wages, superannuation, leave entitlements and retrenchment. 

 

Directors must also ensure the company has lodged all tax reporting documents, including activity statements, tax returns, fringe benefit returns, etc. The threshold does not require tax liabilities to be paid to date.

Q.
What does a restructuring plan look like?

The directors should formulate and (importantly) document a plan that sets out a set of objectives that are comprehensive, milestone based, and time bound.  Examples of these objectives might include some or all of:

 

  • Selling a business unit or non-core assets;

  • Pivoting business model or strategy;

  • Raising additional capital to repay liabilities or fund future expenditure; and

  • Working with key creditors towards compromises in the form of deferrals or compromises of debts.

 

The plan should be continually refined as it is implemented and tested against the counterfactual (administration or liquidation scenarios) to ensure it satisfies the Better Outcome test.  The Better Outcome test is an objective, calculated measurement, undertaken by an ‘Appropriately Qualified Entity’, of the returns generated following the immediate appointment of an Administrator or Liquidator.

Q.
How long does safe harbour last?

Protections under Safe Harbour only commence from the time that the directors start developing one of more courses of action, and one of those courses of action is reasonably likely to lead to a better outcome for the company than the immediate appointment of an Administrator or Liquidator.

 

Safe Harbour protections will continue to apply to a director until:

 

  • the person fails to take a course of action within a reasonable period;

  • the person ceases to take any such course of action;

  • when the course of action ceases to be reasonably likely to lead to a better outcome for the company; or

  • if an Administrator or Liquidator is appointed.

 

Accordingly, Safe Harbour may be available to a director for significant lengths of time, particularly if a course of action spans many months or years.

MORE FAQS

News & Insights

The latest news and developments across Safe Harbour and restructuring.