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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Scott explores:

  • 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.

For more information, please contact:

Scott Guthrie | Partner
+61 7 3100 5019
M +61 421 369 861

E scott.guthrie@dibbsbarker.com

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