Under the new safe harbour laws the engagement of an “appropriately qualified entity” (AQE) is a key consideration for courts when determining whether a director can rely on safe harbour protection. So what does this actually mean and who should you engage to provide safe harbour turnaround advice?
Well there is currently no guidance in the Corporations Act on what an AQE is, however we believe the following will likely constitute an AQE for safe harbour purposes:
- ARITA Professional Members. ARITA members are subject to rigorous regulation and oversight by Australia’s peak insolvency body. You can be assured that ARITA members act according to the highest standards. All our safe harbour experts are ARITA members.
- Certified Turnaround Analysts. These are people that have undertaken the Turnaround Management Association’s turnaround course.
- Lawyers and Liquidators with turnaround and restructuring experience.
LOOK OUT FOR: firms and individuals who style themselves “safe harbour experts” and “turnaround experts” who don’t have any of the formal qualifications referred to above. These pre-insolvency advisors sometimes only know about insolvency and turnaround because they have gone through liquidation or bankruptcy themselves. Not only could directors lose safe harbour protection engaging one of these individuals, they may also later be found to have committed illegal acts based on the advisors’ advice and may be prosecuted for this involvement. IT HAS HAPPENED BEFORE!