COVID-19 Safe Harbour – I Just Spent Six Months in a Leaky Boat…
September 23, 2020DownloadsDownload Article
No one expected these immortal words by Split Enz to be so relevant during the COVID-19 pandemic. However, that is exactly how some directors may be left feeling regarding the requirements to qualify for protection from trading while insolvent under the COVID-19 Safe Harbour provisions.
When COVID-19 hit Australia, it created a crisis requiring urgent and extraordinary action by Federal and State Governments to protect the health of the Australian people and economy. The most significant economic policy was the Coronavirus Economic Response Package Omnibus Bill 2020 (“Bill”), which received Royal Assent on 24 March 2020. The Bill provided unprecedented support and protection to businesses and directors in response to the COVID-19 pandemic.
A Temporary Harbour for Uncertain Times
The Bill, amongst other things, inserted section 588GAAA into the Corporations Act 2001 (“Act”). This provided temporary protection for directors by relieving them of liability for insolvent trading as they navigated the unprecedented uncertainties facing businesses during the legislated relief period (“COVID-19 Safe Harbour”). But just how clear is the COVID-19 Safe Harbour?