A safe harbour course does not automatically cover every new commitment

The label does not approve every purchase

The company is pursuing a turnaround with advice and someone proposes a major new purchase. Do not assume it is protected simply because the business uses the phrase safe harbour. Ask how the commitment relates to the supported course of action and the company's actual position. Directors still need to understand the relevant conditions and responsibilities before making decisions.

Describe the proposed commitment

Imagine a contractor whose course focuses on completing existing jobs and reducing overheads, while a manager proposes equipment for a new line of work. Give advisers the cost, funding, timing and commercial purpose. Identify what has changed since the course was assessed. Do not present a speculative expansion as ordinary spending without explaining the difference.

Use ASIC's debt-specific guidance

ASIC's Regulatory Guide 217 explains that safe harbour concerns debts connected directly or indirectly with developing and implementing the relevant course, and discusses ordinary trading debts where the course involves ongoing trading. Ask an appropriately qualified adviser to assess the proposed debt and conditions. The guidance does not create blanket protection for every commitment made while a turnaround document exists.

Source: ASIC: Regulatory Guide 217, duty to prevent insolvent trading

Test the effect on the course

Show how the proposed purchase changes cash, capacity and obligations. In the contractor's example, the new equipment may consume funds needed for the existing completion strategy. Explain any evidence supporting a change and the alternatives considered. Do not amend the written course merely to make an already preferred purchase appear covered without a genuine reassessment.

Record the decision and advice

Keep the proposal, relevant advice and authorised decision together. Identify conditions, information gaps and any further review required. Avoid describing the adviser as having guaranteed protection unless that is actually the advice, and seek clarification of uncertain wording. The evidence should explain the real reasoning and transaction, not supply a retrospective label for an unexplained commitment.

Reassess when circumstances change

If costs, funding or the business position change before commitment, take that information back to the advisers. Do not rely indefinitely on a discussion about an earlier version of the proposal. A supported course requires continued attention to the actual facts. The practical task is to assess the particular debt and its connection to the turnaround, rather than treating safe harbour as a general purchasing permission.