Deed of Company Arrangement

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Based on a proposal put forward by the Director(s) of the Company, the Voluntary Administrator may recommendthe company enters into a Deed of Company Arrangement (DOCA) with its creditors .  Creditors may consider the proposal and amend it or reject it.

A DOCA allows the company to enter into an arrangement with its creditors.  The arrangements made are commercially designed to meet the particular circumstances facing the company and they  may include the following:

  • Continuation of the business with either the directors or the Deed Administrator responsible for running the business
  • Payment of a fixed sum to creditors
  • Payment of a fixed rate in the dollar
  • A lump sum payment of the above or an instalment schedule
  • The sale of particular assets

The Administrator generally becomes the Deed Administrator, but creditors can appoint an alternative Deed Administrator.

A secured creditor’s rights may be affected by a Deed if the secured creditor voted in favour of the resolution and the company executed the Deed.  The Deed Administrator may also apply to the Court to restrain a secured creditor from realising its security.

This will only apply in situations where the charge holder has not enforced his security either prior to the commencement of the Administration or during the decision period.  The Court would only agree to such an application if it were satisfied that should the secured creditor enforce his security there would be a material adverse effect on the purpose of the Deed and the Court is satisfied that the secured creditor’s interests are adequately protected.

If the company defaults on the terms of the DOCA the Deed Administrator may place the company into liquidation at a special meeting of creditors.

When the company meets all requirements of the DOCA, it will cease to be in administration.