As reported in today’s AFR, a parliamentary committee has recommended that businesses holding assets in trusts should operate under the same laws as other corporations when they fall into financial strife to better help creditors get more of the money they’re owed and sooner.
The committee accepted all the measures proposed by a review of safe harbour legislation, chaired by ABL banking & finance partner Genevieve Sexton, which suggested tweaks to the newly introduced laws to better protect directors who attempt to keep a company afloat in good faith.
Importantly, the committee accepted that a further comprehensive and independent review of Australia’s personal and business insolvency laws was needed.
“Ms Sexton’s review of safe harbour laws in 2021 made 14 recommendations, tweaking around the edges of what the authors believed was a largely effective new piece of legislation,” wrote AFR senior reporter Max Mason. “This included amending the laws to define substantial compliance for listed requirements under safe harbour, which may increase the number of businesses that could be rescued from distress. It also recommended the creation of a plain English best practice guide to safe harbour provisions.”
To read the full article, click here.
