Your Business Angels - Your Business Angels

Your Business Angels


The team at Your Business Angels will recommend the Your Business Angels Safe
Harbour program that promotes a cultural change, planned reform in your business that
reinvigorates a company and helps the stakeholders move on a new path of

It also settles the business’s debts, creates a compliant and profitable business, and builds
or rebuilds a business to be everything a stakeholder wanted when they went into

Safe Harbour is part of new reforms aimed at fostering a culture of self-restructuring within
yet untested guidelines.

As we travel out of the COVID period, the Australian insolvency regime will impose harsh
penalties on directors that continue to trade as a company while it is insolvent.

Your Business Angels consultants are particular about recommending a client to head
down the Safe Harbour channel (pardon the pun!). There is a difference between a
business that can travel this route to one that needs a different solution when debt is

Your Business Angels will have considered the accounts and the stakeholders’ attitude
and culture, and the market they trade-in. They will offer a Safe Harbour plan when there is
a specific period (less than 18 months) when the business could reform.

Draw a line in the sand.

Your concerns around penalties and all that entails means that by acting early, we can
make the changes that the business requires to turn around and demonstrate a line in the
sand that has been drawn. The records show that real change has been implemented in
the company.

The Safe Harbour legislature hopes that a move away from focusing on “stigmatising and
penalising failure” will follow the introduction of the new ‘safe harbour’ provisions and the
stay on the exercise of the so-called ‘ipso facto’ rights in certain circumstances.

Safe harbour and the concept of a ‘better outcome’?

In effect, the amendments give directors a safe harbour from the civil insolvent trading
provisions in section 588G of the Corporations Act whilst attempting to restructure or
turnaround the business.

It does not stop creditors from acting; however, as a business improves and slowly settled
the debt with creditors, there are opportunities to negotiate as the company improves and

The safe harbour provisions apply if (and subject to certain conditions being met) after the
director starts to suspect the company is or may become insolvent, the director begins to
develop “one or more courses of action that are reasonably likely to lead to a better
outcome for the company.”

By contacting and talking to Your Business Angels, this process has already begun.
The Safe Harbour Process must have a better outcome for the Creditors.

A “better outcome” is defined in the legislation to mean “an outcome that is better for the
company than the immediate appointment of an administrator or liquidator of the

This test necessarily requires comparing the return to creditors in immediate insolvency
versus later insolvency and assessing the impact on other stakeholders, such as
employees and shareholders.

(For example, in the building industry, it is amazing how many debtors suddenly have a
liquidated claim if a subcontractor is placed into administration, reducing the amount
available for employees, creditors etc. Your Business Angels will discuss this with you.
Still, a company that can trade on and pay all creditors will always give a better return than
administration or liquidation, not to mention the high administration and liquidation fees
taking up the funds available).

The plan developed and implemented by the director and support from Your Business
Angels does not need to succeed for safe harbour protection to apply.
It is possible that the course of action will result in a worse outcome for the company than if
an administrator or liquidator was appointed immediately upon insolvency having been

However, the safe harbour protection will still apply to the debts incurred by a director
during that period so long as the course of action was still likely to lead to a better outcome
when the decision was taken.

Your Business Angels would like to point out that if we believed that implementing a
plan would not end in a great outcome and we could not manage the creditors
through the process, then we would not recommend it.

If a client chooses to use the Your Business Angels Safe Harbour program, and a client is
seeking to rely on the safe harbour provisions, we will document the plan and the course of
action, including:

a) Identification of the assumptions behind the plan,
b) Provision of an explanation for why the program is likely to result in a better
c) Specification of a clear set of steps required to implement the proposed course of
d) A timetable of milestones capable of assessment.

In the Your Business Angels Safe Harbour program
a) Our client must properly inform himself or herself of the company’s financial position;
this means that accounts are brought up to date, and (generally in all cases), will
view the business financial results each week, reviewed cash flow and considered
what catchup or holding the line is needed for creditors.
b) Review of the week’s results against the weekly plan and making adjustments, whilst
maintaining solid files and records of these events.

Conditions for Safe Harbour

There are certain conditions to the operation of the safe harbour provisions designed to
ensure that safe harbour protects those directors who act “honestly and diligently.”

  1. The debt must be incurred directly or indirectly in connection with the proposed course
    of action. The debt can include ordinary trade debts incurred in the usual course of
    business or debts taken on for the specific purpose of effecting the plan (including
    debts incurred in connection with a restructure or loss-making trade) but will not
    include obligations outside this purpose or incurred for an improper purpose.

    To this end, the Your Business Angels Safe Harbour program insists on stakeholders
    taking a reasonable salary and taking care of all their needs, without any drawings
    from the business. All debt incurred must be within budget and plans, and of course,
    there may be costs that help a business change direction, seek more viable and
    valuable markets.

  2. The company must continue to pay all employee entitlements (including
    superannuation) as and when they fall due.

    The Your Business Angels Safe Harbour program makes the payment of
    superannuation and entitlements a sacred cow.

  3. The company must continue to comply with all tax reporting obligations. In most
    cases, Your Business Angels, starting with a client who is using Safe Harbour,
    will be able to pay future BAS liabilities.

Further, the safe harbour provisions’ protection does not extend beyond protecting a
director from civil liability for insolvent trading. During the safe harbour period, directors
must continue to comply with their other legal obligations, such as director duties to act in
good faith and the company’s best interests.

Also, the safe harbour protections do not prevent an insolvency practitioner’s appointment
(including an administrator, liquidator, or receiver) by a third party during the safe harbour

That is why Your Business Angels are particular about taking on a Safe Harbour
If a business was at any time threatened with legal action, has creditors
“screaming”, have had a barrage of red letters and threats from the ATO, we would
propose a different solution (and we have many solutions – ones developed from 27 years
of working with companies that have a problem or are distressed).


If a plan can be developed that gets the business through its problems and a decent sized
light at the end of the tunnel, we will recommend the Safe Harbour journey.

It’s not an insolvency short cut. It requires excellent housekeeping of finances, discipline to
follow a plan, and the need to work closely with the team at Your Business Angels.

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