Safe Harbour provisions are designed to shield directors from personal liability for insolvent trading when they are actively trying to turn around a financially distressed company. Protection applies as long as the course of action being taken is likely to lead to a better outcome than immediate liquidation or administration.

To qualify, directors must ensure the company meets its employee entitlements, stays compliant with tax reporting obligations, and the turnaround plan is likely to improve the company’s financial situation. Seeking advice from qualified entities is also crucial.

Safe Harbour engagement requires maintaining accurate financial records and regular monitoring of both financial status and restructuring efforts. It emphasizes robust governance with clear documentation of all decisions and strategies.

These provisions cannot be applied retrospectively. Protection starts when the company begins to develop and act on a restructuring plan that meets Safe Harbour conditions.

The process includes assessing the company’s financial health, consulting with advisors to develop a turnaround plan, and implementing operational and financial restructuring. Continuous monitoring and adjustment of the plan are essential.

There is no set time limit for Safe Harbour protection. It lasts as long as the company meets the eligibility criteria and actively works towards a better outcome, with periodic reassessment of the plan’s viability.

If the plan fails, directors may need to consider other options like voluntary administration or liquidation. However, failure of the plan does not reinstate liability for insolvent trading during the protection period if compliance with eligibility criteria was maintained.

Safe Harbour does not permit actions that are dishonest or against the best interests of creditors, such as fraudulent activities or preferential treatment of certain creditors. Actions must aim at achieving a collective better outcome for the company and its creditors.