Vol 23 (2026) - Issue 2

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Australia’s Safe Harbour for Director Insolvent Trading under Scrutiny

Synopsis
Australia’s director insolvent trading laws have long been regarded as some of the strictest in the world.
Following concerns that such laws could discourage good faith restructuring efforts to save companies in financial distress, the Australian federal government introduced a safe harbour for directors against insolvent trading liability. These safe harbour laws were introduced in 2017 and have yet to be tested thoroughly in court. Recent corporate collapses have raised questions about how long the safe harbour period can operate and these may lead to the first real test case on the operation of the safe harbour provisions. This article explains how the safe harbour regime under the Corporations Act works to limit the liability of company directors for insolvent trading in their attempts to extract their company from its financial difficulties.