New insolvency law reforms. What does this mean for you?
The government introduced new Safe Harbour laws and a restriction on the enforcement of ipso facto rights. How will this affect you?
The Safe Harbour offers company directors protection from personal liability for insolvent trading. This protection will only be available if the company director puts in place a suitable plan and engages a suitable advisor to oversee and help implement the turnaround plan. Also to be eligible the company needs to be up to date with its taxation liabilities and lodgments.
If he plan is properly documented and supervised by a suitable advisor the director will not be personally liable for insolvent trading if the company later fails and goes into liquidation.
The ‘ipso facto’ reforms aim to limit counterparties from exercising contractual rights as a result of the company entering into administration, a scheme of arrangement or receivership (for example this should stop a landlord from cancelling a lease just because the company has gone into administration). The new ipso facto laws will not be retrospective.
The government is also considering a new system whereby they will introduce a director Identification Number regime, which will allow government agencies to monitor directors across different government databases. This will help government agencies tackle anti phoenixing.
If you would like to learn more about company liquidation, then please contact CRS Insolvency Services on 1800 210 073 to speak to our friendly and expert insolvency specialists.