Practical Law ANZ Glossary w-006-4190 (Approx. 3 pages)
Glossary
Deed of company arrangement (DOCA)
A binding arrangement between a company and its creditors that sets out how the affairs and assets of the company are to be dealt with. A DOCA is usually the outcome of a voluntary administration process in which creditors have voted in favour of a DOCA proposal.
The purpose of a DOCA is to maximise the chances of the company remaining in business. A DOCA may also result in a better return for creditors than a winding up of the company.
A DOCA binds all unsecured creditors of the company (even if they voted against the proposal). By agreeing to enter into a DOCA, unsecured creditors:
Compromise their debt or claim against the company (which arose on or before the date of the deed).
May receive a return or dividend payment in respect of their debt or claim from any available assets of the company.
Agree to the balance of their debt or claim against the company being extinguished.
A secured creditor that votes in favour of a DOCA is bound by it and may be restricted from enforcing the security if the terms of the DOCA so provide (or if the court grants a restraining order). A secured creditor that abstains from voting on a DOCA proposal or votes against it is not bound by the DOCA and is able to realise or otherwise deal with the secured property.
A lessor that votes in favour of a DOCA may be restricted from re-entering and recovering possession of the leased premises if the terms of the DOCA so provide (or the court grants a restraining order). A lessor that abstains from voting or votes against the DOCA will generally be able to re-enter the leased premises and recover possession (subject to the provisions of the lease and the statutory restrictions on re-entry and forfeiture).
The deed administrator is responsible for ensuring that the terms of a DOCA are carried out.