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:

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.

For more information, see Practice note, Deeds of company arrangement and Checklist, Quick guide to the effect of a DOCA on the company and key stakeholders.