Can listed group companies with nervous lenders use Safe Harbour?
2 mins reading time
Hear from fellow directors who successfully chartered a course through the same treacherous waters.
All sorts of companies are eligible in all sorts of situations.
Safe Harbour only applies to businesses that are conducted through a company. It doesn’t matter whether that company is public. If your business is conducted through a trust, then Safe Harbour is available if the trustee of the trust is a company.
In March 2018 the ASX said: “The fact that an entity’s directors are relying on the insolvent trading safe harbour to develop a course of action that may lead to a better outcome for the entity than an insolvent administration, in and of itself, is not something ASX would generally require an entity to disclosed”. So, listed companies can appoint a Safe Harbour adviser and even better they are not required to disclose that they doing so which is not the case if a formal insolvency or even Investigating Accountant appointment is made.
If you operate a group of companies then you should consider whether all, some, or just one, needs to use Safe Harbour – but it requires a case by case analysis. It may be possible for the companies to use the same adviser and operate under a shared restructuring plan – but that may not always be appropriate and again would need to be considered based on the specific circumstances of the business.
If your bank has asked you to appoint an accounting firm to conduct an Investigating Accountant (IA) review its pretty clear they are worried about your financial situation. It’s true that the IA will ask questions that will get you thinking about your business – but their job is to make sure the bank gets the best outcome – not to look after your interests. If you are in that situation you almost certainly need an adviser whose job it is to help you restructure your business.
Lenders really don’t want to see their customers fail. They will often give business customers additional time, and sometimes additional money, as part of a turnaround. But it is critical for them to see that you have recognised your situation and are taking steps to improve your position. A good adviser can help you to prepare a credible plan and help you convince the lender that you are serious about making changes.
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Can listed group companies with nervous lenders use Safe Harbour?
Hear from fellow directors who successfully chartered a course through the same treacherous waters.
All sorts of companies are eligible in all sorts of situations.
Safe Harbour only applies to businesses that are conducted through a company. It doesn’t matter whether that company is public. If your business is conducted through a trust, then Safe Harbour is available if the trustee of the trust is a company.
In March 2018 the ASX said: “The fact that an entity’s directors are relying on the insolvent trading safe harbour to develop a course of action that may lead to a better outcome for the entity than an insolvent administration, in and of itself, is not something ASX would generally require an entity to disclosed”. So, listed companies can appoint a Safe Harbour adviser and even better they are not required to disclose that they doing so which is not the case if a formal insolvency or even Investigating Accountant appointment is made.
If you operate a group of companies then you should consider whether all, some, or just one, needs to use Safe Harbour – but it requires a case by case analysis. It may be possible for the companies to use the same adviser and operate under a shared restructuring plan – but that may not always be appropriate and again would need to be considered based on the specific circumstances of the business.
If your bank has asked you to appoint an accounting firm to conduct an Investigating Accountant (IA) review its pretty clear they are worried about your financial situation. It’s true that the IA will ask questions that will get you thinking about your business – but their job is to make sure the bank gets the best outcome – not to look after your interests. If you are in that situation you almost certainly need an adviser whose job it is to help you restructure your business.
Lenders really don’t want to see their customers fail. They will often give business customers additional time, and sometimes additional money, as part of a turnaround. But it is critical for them to see that you have recognised your situation and are taking steps to improve your position. A good adviser can help you to prepare a credible plan and help you convince the lender that you are serious about making changes.