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Chris Johnson has spent over 17 years working with owners, management, lenders, lawyers, accountants and stakeholders to find the optimal practical solution for all parties.
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SUMMARY
The Wexted Better Outcome Test is a structured, documented assessment that determines whether a proposed course of action is reasonably likely to lead to a better outcome than immediate administration or liquidation. It is the practical articulation of the requirement under section 588GA(1) of the Corporations Act and ASIC Regulatory Guide 217. This assessment forms the core evidentiary basis for entering and maintaining Safe Harbour protection. It brings together financial modelling, operational feasibility and stakeholder considerations to support directors’ judgement and to demonstrate that the chosen strategy is credible, defensible and commercially rational.
BENEFITS
- Provides the core evidentiary basis for Safe Harbour entry and ongoing Safe Harbour Protection
- Strengthens directors’ ability to justify the chosen course of action
- Produces the written rationale necessary for board minutes and advisor records
TYPICAL PROCESS
- Define the restructuring options available and preferred solution
- Produce detailed financial models for each option (base case + upside/downside scenarios)
- Analyse creditor impact and potential acceptance/objection points
- Assess operational feasibility and implementation risk (timelines, resourcing etc)
- Produce a clear consolidated recommendation
TYPICAL OUTPUTS
- Better Outcome Test report (rationale, modelling, probability assessment)
- Sensitivity and downside analysis (stress scenarios)
- Board briefing and recommended resolution wording for minutes
Scope and Complexity
This is a serious test that should always be carried out by an Appropriately Qualified Entity. In less complex situations, the Better Outcome Test may assess a limited number of restructuring options with straightforward modelling. In larger or higher-risk engagements, it may involve multiple scenarios, creditor outcome comparisons and more extensive documentation.
Other Safe Harbour Services
THE SOLVENCY REVIEW
An independent rigorous assessment of a company’s solvency position — including liquidity, exposures, timing of creditor demands, and short-term cash runways.
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THE ELIGIBILITY REVIEW
A focused compliance assessment against the statutory preconditions for Safe Harbour protection set out in section 588GA(4) of the Corporations Act.
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THE CORPORATE STRUCTURING PLAN
A strategic review and redesign of a company’s operational and corporate structure to support financial stability, governance clarity and long-term recovery.
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THE CONTINUITY TEST
A resilience assessment designed to confirm whether a company can maintain compliance, cash-flow stability and operational continuity following Safe Harbour.
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Looking Over The Cliff: The Better Outcome in Safe Harbour
When the Safe Harbour is ultimately tested, what is ‘reasonably likely’ to be a Better Outcome will be subject to significant scrutiny.
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If you’d like to learn more about Safe Harbour or our Solvency Review service get in touch.
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