Document ID: chunk:federal_register_of_legislation:C2017A00112:clause:1_588ga:p1
Version: federal_register_of_legislation:C2017A00112
Segment Type: clause
Provision Reference: sch 1 cl 588GA (pt 1/2)
Character Range: 3711–6320

588GA  Safe harbour—taking course of action reasonably likely to lead to a better outcome for the company

Safe harbour
 (1) Subsection 588G(2) does not apply in relation to a person and a debt if:
 (a) at a particular time after the person starts to suspect the company may become or be insolvent, the person starts developing one or more courses of action that are reasonably likely to lead to a better outcome for the company; and
 (b) the debt is incurred directly or indirectly in connection with any such course of action during the period starting at that time, and ending at the earliest of any of the following times:
 (i) if the person fails to take any such course of action within a reasonable period after that time—the end of that reasonable period;
 (ii) when the person ceases to take any such course of action;
 (iii) when any such course of action ceases to be reasonably likely to lead to a better outcome for the company;
 (iv) the appointment of an administrator, or liquidator, of the company.
Note 1: The person bears an evidential burden in relation to the matter in this subsection (see subsection (3)).
Note 2: For subsection (1) to be available, certain matters must be being done or be done (see subsections (4) and (5)).

Working out whether a course of action is reasonably likely to lead to a better outcome
 (2) For the purposes of (but without limiting) subsection (1), in working out whether a course of action is reasonably likely to lead to a better outcome for the company, regard may be had to whether the person:
 (a) is properly informing himself or herself of the company's financial position; or
 (b) is taking appropriate steps to prevent any misconduct by officers or employees of the company that could adversely affect the company's ability to pay all its debts; or
 (c) is taking appropriate steps to ensure that the company is keeping appropriate financial records consistent with the size and nature of the company; or
 (d) is obtaining advice from an appropriately qualified entity who was given sufficient information to give appropriate advice; or
 (e) is developing or implementing a plan for restructuring the company to improve its financial position.
 (3) A person who wishes to rely on subsection (1) in a proceeding for, or relating to, a contravention of subsection 588G(2) bears an evidential burden in relation to that matter.

Matters that must be being done or be done
 (4) Subsection (1) does not apply in relation to a person and a debt if:
 (a) when the debt is incurred, the company is failing to do one or more of the following matters:
 (i)