DEED OF COMPANY ARRANGEMENT OUTCOMES
A binding agreement that can let a company keep trading instead of being wound up — how it actually works.
What Is a Deed of Company Arrangement (DOCA)?
Written by Jason, founder of Liquidation Help Australia — we've been exactly where you are.
A Deed of Company Arrangement (DOCA) is a formal, legally binding agreement between an insolvent company and its creditors, made during voluntary administration. It sets out how the company's affairs and debts will be handled — usually so the business can keep trading, or so creditors get a better return than an immediate liquidation would give them. Once creditors approve it and the company signs, it binds every unsecured creditor, even those who voted against it.
Deed of Company Arrangement: The Short Answer
A DOCA doesn't happen on its own — it's one of three possible outcomes once a company enters voluntary administration (the others being liquidation, or the company simply being handed back to its directors). The voluntary administrator investigates the company's position and, if a DOCA is workable, puts a proposal to creditors at the second creditors' meeting. For creditors to approve it, the vote needs a majority two ways at once: more than 50% of creditors by number, and more than 50% by the value of debt owed. If both thresholds are met, the resolution passes — and it binds every unsecured creditor, whichever way they voted. Once creditors vote to approve, the company must formally execute the deed within 15 business days of that meeting (or a longer period if the court allows it). Miss that window, and the company goes into liquidation automatically.
How a DOCA Actually Comes About
What's Actually In a DOCA
There's no single template — every DOCA is negotiated to fit the company's situation — but the Corporations Act sets out what has to be addressed. A DOCA needs to identify who the deed administrator is, what property or funds will be available to pay creditors, how long any moratorium on creditor action runs, what would bring the deed to an early end, and the order in which claims get paid. Employee entitlements are generally required to be paid ahead of other unsecured creditors, unless affected employees agree otherwise. Once it's in place, the company has to disclose that it's "subject to a Deed of Company Arrangement" on its public documents, and the deed administrator takes over running the arrangement — including lodging annual accounts with ASIC.
These three terms get used almost interchangeably by people outside the process, but they're different stages, not different names for the same thing. Voluntary administration is the investigation period — an independent administrator takes control and works out what's realistically possible for the company. A DOCA is one possible outcome of that process: creditors agree to a binding arrangement instead of winding the company up, usually because it promises a better return, or a real chance the business keeps trading. Liquidation is what happens if creditors reject a DOCA proposal (or none is put forward) — the company is wound up, its assets are sold to repay creditors, and it stops trading for good.
DOCA vs Liquidation vs Voluntary Administration
Frequently asked questions.
Liquidation winds the company up — its assets are sold, it stops trading, and it's eventually deregistered. A DOCA is the opposite goal: it's a binding deal with creditors specifically designed to avoid that outcome, either by letting the company (or its business) keep trading, or by giving creditors a better return than liquidation would.
What's the difference between a DOCA and liquidation?
Creditors do, at a formal meeting during voluntary administration. The administrator puts the proposal to a vote, and it needs majority support two ways at once: more than half of the creditors by number, and more than half by the dollar value of what's owed. If either threshold isn't met, the DOCA proposal fails.
Who decides whether a company gets a DOCA?
If a DOCA proposal is voted down — or no workable proposal is put forward at all — the company moves into liquidation. That's the default outcome of voluntary administration when a DOCA or a return to directors' control isn't approved.
What happens if creditors vote against the DOCA?
Yes — directors (often working with an accountant) are commonly the ones who put forward a DOCA proposal, sometimes even before an administrator is appointed. But proposing it is only the first step; it still needs the administrator's assessment and a creditor vote to actually go ahead.
Can a director propose a Deed of Company Arrangement?
Not automatically, and not entirely. A DOCA binds unsecured creditors to whatever terms were voted on — which might mean a partial payout, payment over time, or other arrangements — but it doesn't necessarily release every debt, and secured creditors generally aren't bound unless they agree to be. The exact effect depends on what's actually written into that company's deed.
Does a DOCA wipe out the company's debts?
Every DOCA has to set out its own termination conditions. If the company doesn't meet them — missed payments, for example — the deed can be terminated, and in most cases that pushes the company straight into liquidation.
What happens if a company breaks the terms of its own DOCA?
Are directors still personally at risk once a DOCA is signed?
A DOCA covers the company's existing position, not a director's ongoing duties. If the business keeps trading under the deed and racks up new debts it can't pay, the normal insolvent trading rules still apply — a DOCA doesn't provide personal protection against that.
Talk to someone who understands what you're facing.
We're not liquidators, and we don't put DOCA proposals together — that's specialist, licensed work. What we do is help you understand where you actually stand and connect you with a registered liquidator or administrator who can assess whether a DOCA, voluntary administration, small business restructuring, or something else entirely fits your situation. The free consultation is that first honest conversation, not a fixed pitch.
What a DOCA Means for Directors
A DOCA can be the difference between a business surviving and being wound up — but it doesn't erase a director's other obligations. If the company keeps trading under a DOCA and takes on debts it can't pay, insolvent trading exposure doesn't disappear just because a deed is in place. Directors are usually the ones who propose a DOCA in the first place (often with an accountant's or the administrator's input), but it still has to survive a creditor vote, and creditors can reject it. If your company might qualify by size, small business restructuring is a different process worth comparing too. None of this is something to work out alone — a registered liquidator or administrator can tell you whether a DOCA is realistically on the table for your company's numbers, and what it would actually involve.
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