A Deed of Company Arrangement (DOCA) is a formal agreement between a financially distressed company and its creditors. The DOCA outlines how the affairs of the company will be managed in an attempt to achieve more favourable outcome for creditors than immediate liquidation would provide.

The voluntary administrator will work with the company’s directors and stakeholders to develop a proposal for the DOCA. This proposal outlines how the company’s debts will be dealt with and may include repayment plans, compromises, or other arrangements.

(by 50% in number of the creditors who are voting and 50% in value), the company must sign the deed within 15 business days of the creditors’ meeting, unless the court allows a longer time. If this doesn’t happen, the company will automatically go into liquidation, with the voluntary administrator becoming the liquidator.

The DOCA binds the company, its officeholders and shareholders along with all unsecured creditors, even if they voted against the proposal.  It also binds owners of property, those who lease property to the company and secured creditors (if they voted in favour of the deed). In certain circumstances, the Court can also order these people be bound by the deed even if they didn’t vote for it.

A deed administrator oversees the company’s management under a DOCA.  Generally, the voluntary administrator will become the deed administrator on the basis that he or she has an understanding of the company’s affairs and it is therefore impractical and potentially more costly to replace the incumbent.