Michael Daniel and David Hing explain the recent insolvent trading “safe harbour” reforms and their significance for responsibilities of company directors.

The “safe harbour” amendments to the insolvent trading provisions of the Corporations Act have come into law. The “safe harbour” provisions, in effect, provide an important new defence for directors from claims of personal liability for insolvent trading. The “safe harbour” defence applies to directors incurring debts (which might otherwise constitute insolvent trading) when the debts are connected to taking a course of action reasonably likely to lead to a better outcome for the company. These amendments are designed to allow a director to take reasonable steps to help the company recover from possible insolvency. Consequently, these amendments are significant for all directors and companies. Continue reading…