The new safe harbour legislation changes the game for directors of companies facing corporate renewal or financial distress. In the past, many companies were forced into Voluntary Administration without the opportunity for a turnaround plan to take hold.
Under the new law, directors can take a more strategic approach to corporate restructuring and turnaround allowing them to focus on solving the problems at hand when companies are in a difficult situation rather than worrying about their personal liabilities. It will also encourage directors to take advice from restructuring and turnaround experts at an early stage.
The safe harbour law introduces a ‘better outcome test’. Directors must develop a turnaround plan that is likely to result in a better outcome than the insolvency of the company.
Safe harbour provides directors with the opportunity to restructure troubled businesses so they can turn around their performance and continue to trade, and in turn save jobs and protect enterprise value.
While the changes are intended to encourage entrepreneurial and innovative behaviour, the relief from potential insolvent trading liability will only be available to responsible and diligent directors, who are actively taking steps to address the challenges their business may be facing.
To be successful through the safe harbour period directors will need to ensure that the company is developing and implementing a structured turnaround plan with a focus on improved business performance.
It is important that companies get the right assistance at an early stage to successfully navigate through safe harbour.
At Ferrier Hodgson, we have the experience, skills and unique approach to assist directors to enter safe harbour and implement a turnaround plan. Together with the team in our management consulting practice, Azurium, and our industry experts we provide the full suite of strategic, operational and financial turnaround services.
Our turnaround advisors can work alongside management to address your strategic and operational challenges through:
· Business strategy re-focus
· Business model innovation
· Value chain reengineering
· Digital transformation
· Consumer insights and engagement through analytics
· Enterprise wide cost reduction
· Organisation structure redesign
· Stakeholder communications plan
· Turnaround program management
If you would like to receive our safe harbour guide please contact your local Ferrier Hodgson partner.
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