On 7 October 2021 the AICD and the Business Council of Australia (BCA) made a joint submission to the Insolvency Safe Harbour Review. The submission reflected the view of the AICD and BCA that the Safe Harbour has been a successful insolvency policy reform that has driven changes in director behaviour to focus on restructuring businesses.
The Safe Harbour has directly resulted in economic benefits through preserving employment, owner equity, providing greater returns to creditors and maintaining tax receipts. It has had broader economic benefits by helping to create a culture in which business preservation is encouraged and has enabled viable businesses to be saved which, without the option of Safe Harbour, would have been needlessly shut down.
The submission also makes the case that the success of the Safe Harbour demonstrates the potential for further reform of Australia’s insolvency laws and the benefits that can result from appropriately reducing the threat of personal liability faced by directors.
A copy of the submission is available here.