By now, most accountants are likely to have heard about, and perhaps have some familiarity with, the new “safe harbour” laws. But for those accountants who still feel unsure about their knowledge of these new provisions, the following article will help you get your head around what safe harbour means for your accounting practice.
How safe harbour fits into the existing law
This article was first published in the LexisNexis Corporate Rescue and Insolvency Journal (2017) 2 CRI 45.
Key Issues
When a lessee fails to comply with a notice to remedy a non-payment or other lease default, the lessor may be entitled to terminate the lease and retake possession of the property. This is commonly done by changing the locks.
However, a lessee who wants to save itself from being evicted can apply to court to prevent the lessor from retaking possession. In Queensland this application is made under section 124 of the Property Law Act 1974 (Qld) and is known as an application for relief against forfeiture.
When is relief against forfeiture granted?
How can I protect my company from cash flow problems due to outstanding payments?
It is well worth keeping a close eye on your customers to spot any early signs of financial distress and act quickly.
Companies in distress often undertake a sales of assets to alleviate cash flow or debt repayment issues when other lines of credit or source of funds have been exhausted. Such decisions are not taken lightly, especially as the disposal of assets is likely to detrimentally impact the underlying business or forecasts. Ultimately creditors’ demands and survival instincts will result in action being taken however it is often too late and to the detriment of the business.
Introduction
It is common for companies in distress to undertake a sales process of assets to alleviate cash flow or debt repayment issues. Often this course of action is the last resort after all other lines of credit have been exhausted or creditors have stopped providing extended terms of trade. Companies should not take such decisions lightly, especially if the sale will impact the underlying business or forecasts. However, ultimately creditors’ demands and survival instincts result in action being taken (often too late and to the detriment of the company).
The current decline in oil prices, which continues to show no signs of a long-term reversal, is having unexpected and unwanted consequences, many of which may turn into long-lasting troubles for the oil and gas industry, especially for its investors.
In the November/December 2014 edition of the Business Restructuring Review, we discussed a decision handed down by the U.S. District Court for the District of Delaware addressing the meaning of “unreasonably small capital” in the context of constructively fraudulent transfer avoidance litigation. In Whyte ex rel. SemGroup Litig. Trust v.
On 20 June 2016, Rio de Janeiro-based Oi SA, Brazil’s fourth-largest telecom company, filed the largest judicial reorganisation petition in Brazil’s history, days after debt restructuring talks with creditors collapsed. The filing of Oi and six subsidiaries lists 65.4 billion reais (USD19.26 billion) in debt. The company has also filed for Chapter 15 protection in the U.S. As from the date of filing the accrual of interests, penalties, monetary correction and late charges are suspended and will only become enforceable if the judicial reorganisation becomes a bankruptcy.