A DOCA provides additional time to help a company get back on its feet

A Deed of Company Arrangement or DOCA is a proposal that is put to creditors by the directors of a company in Voluntary Administration (VA) that binds all creditors. The proposal governs how the company’s assets and affairs will be handled.

One of the attractions of a DOCA is that it provides additional time to help a company get back on its feet – which may be all it needs to avoid liquidation. DOCAs help a business to keep operating with some or all of its normal business operations.

A DOCA is a binding arrangement between a company and its creditors

A DOCA is a binding arrangement between a company and its creditors, which governs how the company’s affairs and assets will be handled if it is danger of becoming insolvent or has entered into voluntary administration.

The main purpose of a DOCA

The main goal of a DOCA is to enable a business to continue trading and to produce a better outcome for all relevant parties, rather than simply placing it into liquidation.

If creditors accept a DOCA, the company must sign the deed within 15 business days of the creditors’ meeting – unless the court has allowed for a longer period of time. A DOCA also binds all unsecured creditors ­– even if they voted against the proposal.

Company executes a DOCA

After the DOCA is executed, the Voluntary Administration ends and becomes a Deed Administration that is governed by the DOCA.

If the company does not sign within the required time, it will automatically go into liquidation and the Voluntary Administrator becomes the Liquidator.

Resolution: DOCA is terminated upon final payment & settlement of debts

A DOCA allows for the full and final settlement of the debts, even if the debts are not paid in full.  The company directors also regain control of the company although with certain restrictions attached.

The DOCA is terminated after the company makes its final payment and from this point, the company can continue as a solvent company and move on from the administration.

There are a number of advantages to a DOCA, particularly around allowing the company to move forward if it finds itself in financial difficulty and has appointed an administrator. If the company finds a solution through entering into a DOCA it may result in a better outcome than being wound up.

Extensive DOCA experience, fast assessment

At WAIS, we have extensive experience with DOCAs and can quickly assess your situation to determine whether this option is the best one for your company’s situation.

Ask our experts if a DOCA is the right solution for yourself or for your client

Key benefits of a Deed of Company Arrangement (DOCA)

Remain operational

Helps a company avoid liquidation and continue on with business.

Staff employment

The employment of staff continues if possible. 

Regain control

A Director can regain control of the company once the DOCA is finalised.

Greater return

Has potential to provide larger return for creditors.

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