What is Deed of Company Arrangement (DOCA)?

A Deed of Company Arrangement (DOCA) is a legally binding agreement entered into by a financially distressed company, its creditors, and a Deed Administrator. It is a part of the voluntary administration process under Australian corporate law, specifically governed by Part 5.3A of the Corporations Act 2001 (Cth). The purpose of a DOCA is to facilitate the restructuring or reorganization of a company in financial difficulty, with the aim of maximizing the chances of its survival and providing a better return to creditors than they would receive through liquidation.

The DOCA outlines the terms and conditions under which the company will operate during the restructuring process, the contributions it will make to repay its debts, and any proposed changes to its management or operations. The Deed Administrator, who is usually the same person as the voluntary administrator, oversees the implementation of the DOCA and ensures that the company complies with its terms.

Creditors vote on whether to accept the proposed DOCA or reject it in favor of an alternative outcome, such as liquidation. If the DOCA is approved by a majority of creditors, it becomes binding on the company, its directors, shareholders, and unsecured creditors. If the company successfully completes the terms of the DOCA, it can continue trading and emerge from the voluntary administration process.