Directorship risks for turnaround professionals advising on safe harbour
|Services:||Corporate & Commercial, Restructuring & Insolvency|
|Industry Focus:||Financial Services|
|Date:||12 Dec 2017|
Australia’s new safe harbour legislation contemplates that company directors may appoint an “appropriately qualified entity” to advise on, or assist in developing, a plan to bring about a better outcome for the company than immediate insolvency. The legislation does not define “appropriately qualified entity” but it could include a wide range of advisors from insolvency practitioners to accountants who, based on their expertise, are best suited to assist the company with a turnaround plan.
In this video interview, Scott Guthrie discusses the potential risk to a turnaround professional of inadvertently acting as a director of a company they are assisting with a safe harbour turnaround plan. The risk might arise in circumstances where safe harbour ends, the company goes into liquidation and a liquidator asserts that the directors of the company did not properly activate the protection of a safe harbour defence.
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- how a directorship risk might arise through the extended definition of “director” in the Corporations Act 2001 (Cth), which captures de facto directors and shadow directors
- what steps a turnaround professional can take to reduce their risk of being considered a director of a company they assist with a safe harbour turnaround plan.
Turnaround professionals should seek advice when in doubt about their risk exposure when advising on a safe harbour turnaround plan.
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