Deed of Company Arrangement

If your company has financial difficulties and has entered Voluntary Administration one of the options is a Deed of Company Arrangement. 

A proposal for a Deed of Company Arrangement (DOCA) must be put to the companies  creditors by a Voluntary Administrator during the Voluntary Administration period. It is important to note that a Deed of Company Arrangement can only be implemented as part of the Voluntary Administration process.

The Voluntary Administrator must report to creditors and provide a recommendation on whether the DOCA is in the best interests of creditors. The real test for any Deed of Company Arrangement proposal is whether creditors will receive a higher dividend against their outstanding debt under the proposed DOCA compared to liquidation.

Creditors must first approve the proposal for a Deed of Company Arrangement at the second meeting of creditors and if the DOCA is approved by at least 50% of the creditors (in number and value), it then becomes legally binding on all unsecured creditors once executed by the company and the Deed Administrator.

The Deed Administrator will then administer the Deed of Company Arrangement and make the distribution to all company creditors in accordance with the terms of the DOCA. A Deed of Company Arrangement can be very flexible and your company may be able to continue to trade under the supervision of a Deed Administrator.

Some examples of a Deed of Company Arrangement include:

• An immediate one off payment to creditors as full and final settlement of their claims.
• An immediate payment to creditors with further payment to be made from additional proceeds in the future such as through the sale of assets.
• A series of payments to be made from the profits of ongoing trading for a specified period.