Deeds of Company Arrangement

Deed of Company Arrangement (DOCA)

Deed of Company Arrangement

A Deed of Company Arrangement (DOCA) is a lawful method of allowing the director to propose a compromise to the creditors of the company so that once the compromise payment is made to creditors by the Voluntary Administrator, the company’s control can be returned to the director(s).

In situations where a DOCA is proposed, it is important that the company considers why it became insolvent and be proactive about implementing change such that it can be profitable in the future. The Leopard needs to change its spots.

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Creditors of a company are usually classified as:

Secured Creditors;

Employee Creditors; and

Unsecured Creditors.

In a DOCA scenario, all secured creditors and employee entitlements must be paid in advance of any return to unsecured creditors. In rare cases, employees sometimes surrender their entitlements, but this must be achieved by a majority of employees resolving to do so in a meeting convened for that purpose.

For further details on the costs and benefits of a Voluntary Administration, the director’s obligations, the role of the Administrator, the effect on the company’s directors and when you should consider the Voluntary Administration process, please visit our FAQ page.