Deed of Company Arrangement
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 can include one or a combination of the following:
- Payment of a lump sum
- Payments over time
- Disposal of some or all assets
- An organisational restructure
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.
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.
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.
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.
See our other corporate insolvency services: