Out of the "safe harbour" and into the "dry dock" | Practical Law

Out of the "safe harbour" and into the "dry dock" | Practical Law

As part of its economic response to the 2019 novel coronavirus disease (COVID-19), the federal government has passed a "temporary safe harbour" insolvency measure. It suspends (for six months, if not extended) the current "insolvent trading" regime whereby directors can be personally liable for debts incurred by their company at a time it is insolvent.

Out of the "safe harbour" and into the "dry dock"

Practical Law ANZ Article w-024-8441 (Approx. 7 pages)

Out of the "safe harbour" and into the "dry dock"

by Tony Troiani, Partner, Samantha Kinsey, Partner, Will Heath, Partner, Nicola Charlston, Partner and Louise England, Senior Associate, King & Wood Mallesons
Published on 06 Apr 2020 • Australia
As part of its economic response to the 2019 novel coronavirus disease (COVID-19), the federal government has passed a "temporary safe harbour" insolvency measure. It suspends (for six months, if not extended) the current "insolvent trading" regime whereby directors can be personally liable for debts incurred by their company at a time it is insolvent.
This article explains the key considerations for directors under the new temporary rules. It also discusses the possibility that if used wisely, the increased flexibility they allow will prove a more effective way for companies and creditors alike to navigate financial distress in the future.