What is a deed of company arrangement (DOCA)?
A deed of company arrangement (DOCA) is a binding agreement under Part 5.3A of the Corporations Act 2001 (Cth) between an insolvent company and its creditors about how the company's affairs will be dealt with. DOCAs are voted on by creditors at the second meeting during voluntary administration under section 439A. If passed by the required majority, the DOCA binds all creditors (including dissenting ones) and the company exits administration.
How DOCAs work in the voluntary administration process
When a company is placed in voluntary administration, the administrator investigates and at the second meeting under section 439A recommends one of three outcomes: return to directors, liquidate, or execute a DOCA. A DOCA proposal typically offers creditors a payment (sometimes via a fund contributed by a new investor or the directors) in return for releasing the company from pre-administration debts.
Creditor voting
A DOCA must be approved by the creditors' meeting — majority in number and majority in value of creditors present and voting. If one majority is not reached, the chairperson has a casting vote under section 75-115 of the Insolvency Practice Schedule. Once executed, the DOCA binds all creditors (including creditors who voted against it), subject to the secured creditor exception.
Secured creditors and the "ipso facto" stay
Secured creditors are not bound by a DOCA unless they vote in favour or consent. Under section 444D(2), a secured creditor can enforce its security despite the DOCA. Part 5.3A also provides "ipso facto" stays under section 451E — contractual termination rights based on the insolvency event cannot be exercised while administration or DOCA proceedings are on foot.
How I help insolvency lawyers
I draft DOCA proposals, analyse DOCA terms for creditor advice, and prepare section 439A reports to creditors. For insolvency firms this is a volume routine workflow where accuracy on Part 5.3A compliance matters.
Common issues
- A DOCA cannot override secured creditor rights without consent
- DOCAs can be set aside under section 445D for unfair prejudice to a class of creditors
- Related-party creditors should be scrutinised — their votes can be excluded
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