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Safe Harbour is a tool to protect Directors from an insolvent trading claim if the turnaround management is not successful. I have seen companies advertise that they are “under safe harbour” but as it is not a tool to protect a company from its creditors, advising creditors is not the right thing to do. Please note that Safe Harbour is not right for all companies to implement. If there is no way forward for a company’s business, safe harbour will not help you. We will review your company’s business and advice if the business has a long-term financial future, refer to our comments on turnaround management.
Let’s delve into what safe harbour actually is. As previously mentioned, it is a tool to protect Director(s) from an insolvent trading claim from a Liquidator if a turnaround management strategy does not work.
As per usual utilising safe harbour comes with a bunch of rules that must be adhered to:
A written plan with actionable steps that will result in a better outcome for creditors than immediately placing the Company into Liquidation or Voluntary Administration. What this really means is no pie in the sky plans are allowed. The plan must be actionable based in fact and reality. Drafting a cashflow to forecast the future and compare such cashflow against the actual on a weekly and monthly basis to ensure that the Company is making positive strides.
Employee Entitlements must be paid and up to date. These entitlements must continue to be paid on time throughout the Safe Harbour plan. You do not need to put money aside for annual leave being taken in the future, but you do need to be able to pay your employees their wages, superannuation and any other entitlement on time.
Statutory lodgements must be up to date and lodged on time. The majority of Companies will have obligations to lodge their Business Activity Statement in respect of Goods and Services Taxation and Pay As You Go Withholding with the Australian Taxation Office. These lodgements must be lodged on time and continue to be maintained going forward.
Employ a Turnaround Management Practitioner. This is where we at LemonAide can help you. We meet with you as needed, to discuss where you are up to in the plan and help further develop plans and documentation to turnaround a Company and utilise the Safe Harbour regime.
Interested in seeing how we can help you? Click on the Book an Appointment button to schedule an appointment to see if we can our turnaround management strategies including safe harbour are right for you. You have everything to gain and nothing to lose by talking to us today.