Deed of Company Arrangement

A Deed of Company Arrangement is basically an agreement with your creditors which is an option following a Voluntary Administration if you do not wish your company Liquidated.

A Deed of Company Arrangement (DOCA) is a binding arrangement between a company and its creditors setting out how the company’s affairs will be dealt with to resolve the company’s debt problems without the need for liquidating the company.

A DOCA is formulated and proposed by the Director(s) and/or a third party during the Voluntary Administration of a company and is set out to creditors in the Administrators major report. Creditors then are asked to accept the terms of the DOCA by passing a resolution that the company execute a DOCA at the major meeting of creditors.

A common DOCA proposal provides for a lump sum payment after the signing of the DOCA with periodic payments over a time period specified in the DOCA.

A DOCA can also include recapitalization of a company and the sale of all or a portion of the company’s assets.

If the company business continues to trade, DOCA contributions can be made from ongoing trading profits.

A DOCA will end when:

  • The terms of the DOCA are met in full by the company;
  • it is terminated under the terms of the DOCA due to a default;
  • the creditors resolve to terminate the DOCA due to a default; or
  • the Court make and orders that the DOCA be terminated due to a default or any other reason

The DOCA will set out who is to be the Deed Administrator. Generally the person who is appointed as the Voluntary Administrator will then by a resolution of creditors, be appointed as the Deed Administrator.

The Deed Administrator’s role is to ensure that the company complies with the DOCA. The Deed Administrator usually does not play an active role in the management of the Company as the company is normally handed back to its officers.

When all of the DOCA funds are received, the Deed Administrator is responsible to paying the Deed funds to creditors as set out in the DOCA.

Would a Deed of Company Arrangement benefit your company? Contact Insolvency Choice today for more information.