Small Business Restructuring › Deed of Company Arrangement
Deed of Company Arrangement Lawyers — Binding Creditors. Saving the Business.
A Deed of Company Arrangement (DOCA) is the outcome of a successful voluntary administration — a binding agreement between the company and its creditors that compromises debts and allows the company to continue trading. A well-structured DOCA can resolve years of creditor pressure in a single binding agreement. A lawyer advises on DOCA terms, creditor strategy, and execution — and manages the company through to DOCA completion.
⚠ A DOCA proposal must be put to creditors at the second creditors' meeting — within 20 business days of the first meeting. Preparation of a compelling DOCA proposal requires legal and financial advice from the outset of the voluntary administration. Get advice now.
DOCA Matters We Handle
From DOCA proposal to completion — and defending termination applications.
DOCA Proposal Development
A lawyer works with the directors and the administrator to develop a compelling DOCA proposal — setting out the return to creditors under the DOCA, the funding mechanism (from the business's future earnings, a related-party contribution, or asset sales), the timeline for payments, and the conditions that must be met. The proposal must be more attractive to creditors than liquidation — a lawyer identifies what the liquidation return would be and structures the DOCA to exceed it.
Creditor Negotiations
Key creditors — particularly the ATO, secured creditors, and major trade creditors — should be engaged before the second creditors' meeting to maximise the prospect of a successful vote. A lawyer identifies the creditor voting dynamics, engages in pre-meeting negotiations with key creditors, and prepares submissions for the second creditors' meeting.
DOCA Execution & Establishment
A DOCA must be executed within 15 business days of the second creditors' meeting. A lawyer prepares the DOCA document — ensuring it contains all required statutory provisions, the agreed commercial terms, the deed fund mechanics, and appropriate default provisions. The DOCA is executed by the company, the administrator (who becomes the deed administrator), and such creditors as are required.
DOCA Administration & Compliance
During the DOCA administration period, the company must comply with the DOCA terms — making regular payments into the deed fund, maintaining agreed financial ratios, and meeting reporting obligations. A lawyer advises on DOCA compliance, manages variations where the company's circumstances change, and advises on the consequences of breach.
Defending DOCA Termination Applications
A creditor or ASIC can apply to the Court to terminate a DOCA where the company has breached its terms or where it is just and equitable to do so. A lawyer defends DOCA termination applications — identifying whether the alleged breach has occurred, whether it has been remedied, and whether termination is appropriate in all the circumstances.
DOCA Completion
When a DOCA is fully performed — the deed fund has been paid in full and distributed to creditors — the DOCA terminates and the company is released from its obligations to the creditors bound by the DOCA. A lawyer manages the deed fund distribution, prepares the final accounts, and ensures the DOCA is formally terminated — releasing the company from its pre-DOCA creditor obligations and giving it a clean balance sheet.
The Legal Framework
Deed of Company Arrangement — Part 5.3A Corporations Act 2001.
The creditor vote — s439C
At the second creditors' meeting, creditors vote under s439C on whether to approve the DOCA, return the company to the directors' control, or wind up the company. The DOCA is approved if a majority in number and a majority in value of creditors who vote approve it. Where there is a conflict between the number and value majorities, the chairperson has a casting vote (usually the administrator). Related-party creditors are excluded from voting on a resolution that affects their interests differently from other creditors without Court leave.
DOCA binds all creditors — s444D
An approved DOCA is binding on all creditors of the company who had notice of the second creditors' meeting — including creditors who voted against the DOCA, creditors who did not attend the meeting, and creditors who did not lodge a proof of debt. This is the most powerful feature of a DOCA — it binds dissident creditors and prevents them from pursuing the company for pre-DOCA debts once the DOCA is being complied with. Secured creditors who did not vote to approve the DOCA are not bound unless the Court orders otherwise.
Priority of claims in a DOCA — s556
The order of priority for the distribution of the deed fund under a DOCA generally follows the priority order for liquidation under s556 of the Corporations Act 2001 — unless the DOCA provides otherwise (which it can, subject to limits). Priority claims include the administrator's remuneration and expenses, employee entitlements (wages, annual leave, long service leave), and superannuation — before any return is made to unsecured creditors. A DOCA that proposes to vary the priority order requires Court approval or the consent of the relevant priority creditors.
DOCA termination — s445C
A DOCA can be terminated by the creditors (by resolution at a meeting), by the Court (under s445D, on application by a creditor or ASIC), or automatically where the DOCA provides for termination on the occurrence of specified events (for example, completion of the plan). The Court can terminate a DOCA where it is satisfied that the DOCA cannot be complied with or that compliance would be inequitable, or where the DOCA is in the interests of the creditors as a whole to do so. Where a DOCA is terminated, the company typically goes into liquidation.
ATO and DOCAs — compromise of priority debts
The ATO is a significant creditor in many DOCAs — typically as a priority creditor for superannuation guarantee charge and as an unsecured creditor for income tax and GST. The ATO has a published policy on DOCAs and SBR plans — it will generally support a DOCA or SBR plan that provides a better return to creditors than liquidation, where the company has been cooperative and where future compliance is likely. A lawyer who has experience negotiating with the ATO in the DOCA context maximises the prospect of ATO support for the plan.
Challenging a DOCA — s445D
A creditor who is dissatisfied with the DOCA can apply to the Court under s445D to terminate it — on the grounds that the DOCA was approved by material misrepresentation, that it is the result of oppressive conduct, or that it is in the interests of creditors to do so. A Court can also order that a creditor be excluded from the operation of the DOCA where there are special circumstances. A lawyer advises directors on the risk of DOCA challenge and structures the DOCA to minimise that risk — for example, by ensuring the administrator's report is comprehensive and that all creditors receive proper notice of the meeting.
How It Works
One request. Free DOCA advice.
Tell us where you are in the VA process, the company's total liabilities, the nature of the creditors, and whether a DOCA proposal is being considered. A restructuring lawyer will advise on strategy.
Submit Your RequestDescribe the VA and proposed DOCA
Tell us the stage of the voluntary administration, the company's total liabilities, the major creditors, the proposed DOCA terms (if developed), and any creditors who have indicated they will oppose the DOCA.
Matched to a DOCA lawyer
Your request is matched to a restructuring lawyer experienced in DOCA preparation and creditor negotiation — who can advise on DOCA terms, creditor strategy, and the second creditors' meeting.
Free consultation
A restructuring lawyer contacts you for a free consultation — advising on the DOCA terms, the creditor voting dynamics, and the strategy for achieving a successful second creditors' meeting vote.