REFORM
The decision by the Turnbull Government to embark upon the most significant reform to Australias insolvency laws for over 20 years has been embraced by many.
One of the key features of the governments Improving bankruptcy and insolvency laws proposals paper is the introduction of a so-called insolvent trading safe harbour.
Under the current insolvent trading regime, directors may be personally liable for all debts incurred by the company while the company is insolvent. Directors may also incur criminal liability for such insolvent trading in circumstances where the trading is held to be reckless.
The twilight zone during which directors are exposed to insolvent trading liability can be significant as even a company with plenty of…