A Deed of Company Arrangement (“DOCA”) is a binding agreement between the company, creditors (generally excludes secured creditors), and the Deed Administrator. A DOCA governs how the company’s debts are compromised and/or paid over an extended period.
A DOCA is flexible in that it may provide for:
- a moratorium on creditor claims; and
- a compromise of debts.
A DOCA differs from other insolvency appointments as it does not necessarily bring the company’s existence to an end. A DOCA may provide for control of the affairs of the company to revert to the directors and result in a better return to creditors than liquidation.
Often the advantage to a company of a DOCA is that once it has dealt in an orderly way with creditor claims, the company can survive its financial difficulties and continue to trade, generally with its usual customers.