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A deed of company arrangement (DOCA) is an administration process that follows voluntary administration. It’s a binding arrangement between your company and its creditors governing how its affairs will be dealt with. The purpose of a DOCA is to maximise the chances of your company continuing while providing a better return to creditors than winding up.
DOCA proposals are flexible and tailored to the needs of your business’ situation. Common types of DOCA proposals may include (but aren’t limited to):
- A third party injecting cash into your business to partially repay creditor claims
- Your business contributing to a fund (managed by a deed administrator from trading profits) to partially repay creditor claims
What does the DOCA process involve?
After we’ve helped you draw up your DOCA, the document will be proposed and considered at a meeting of your company’s creditors. If your creditors accept it, the director will generally resume control of your company.
The voluntary administration process typically takes 25 business days. However, the issues in a DOCA are generally not resolved in this timeframe. Once the DOCA terms have been complied with, your company is released from administration and creditors can no longer recover any unpaid debts from prior to the administration.
What are the benefits of a DOCA?
- Allows continued trading
- May provide a greater return to creditors than if the business was wound up
- Can help a business return to solvency
- Offers potential to offset trading losses against future profits