What Is A Deed Of Company Arrangement And Why Your Business Needs One

Jan 22, 2022 | Uncategorised

In addition to Australia’s competitive marketplace, businesses have had their trade slow down or completely stop, during the various lockdowns and measures taken to reduce the impact of the Coronavirus pandemic on the population.

It looks like we are inching towards a “new normal” way of living and working. Many companies are dealing with the after-effects of little or no income for nearly two years. Problems for businesses are made worse by potential customers also short of money. The closed international borders have hit the Australian labour market, with overseas students and backpackers not available for some low-paid jobs.

It’s little surprise, then, many businesses are having financial difficulties and are folding.

This article will examine one of the options open to you to potentially save your business and return to profitable trading. We’ll give an overview of one process you could follow if your business gets into financial difficulties to use a Deed Of Company Arrangement for the benefit of your company and your creditors.

We’ll show you where you can get help and advice to help you through this situation. We’ll also disclose the most important thing you need to do!


A Deed Of Company Arrangement (DOCA) is one of the possible outcomes when a company enters voluntary administration. It is a means of resolving your financial difficulties and enabling your business to return to normal trading.

How did we get to this point?

The company was struggling with ongoing cash flow problems. Income had slowed while expenses (wages, tax, property loans and maintenance, utilities and suppliers) all needed to be covered.

The company directors were stressed and worried. They didn’t want to let down employees or creditors but they were aware of the legal implications for them of trading while insolvent.

They made the smart decision to put the business into voluntary administration. They appointed an administrator hoping to return to normal trading.

What does the administrator do?

The administrator takes over the management of the company. They will conduct an investigation into the company’s finances, including trading practices and will identify property, plant and other assets. They will feedback to the creditors and may report any irregularities to The Australian Securities and Investments Commission (ASIC).

On completion of their investigation, the administrator will recommend one of three options, to be voted upon by the creditors:

  • 1. Liquidation
    The business is unable to continue. Wind up the company. Sell off company assets to settle outstanding debts.
  • 2. Return to normal trading
    Financial investigations have shown the company is able to continue to trade and return to profitability.
  • 3. A Deed of Company Arrangement
    A plan to pay the creditors.

Why have a Deed Of Company Arrangement (DOCA)?

If it is approved by the creditors, the Deed Of Company Arrangement is a legally binding plan to repay some, or all, outstanding debts. In approving the DOCA, the creditors believe it offers them a better return than if the company was put into liquidation.

The DOCA may include

  • Details of all debts covered by the deed.
  • Information of all assets and property proposed to be used to repay the creditors.
  • A schedule for repayment of the debts
  • The term and circumstances of any moratorium, during which the creditors may agree not to pursue their debts.
  • Who will administer the DOCA. (Normally the current administrator as they are already familiar with the company and the situation).

When does the DOCA end?

The DOCA should identify when it will terminate. This is normally when the final, scheduled payment is made to the creditors and debts are paid as agreed in the DOCA.

Corporate Lifeline for professional, friendly advice and help

At Corporate Lifeline, we offer financial solutions for struggling businesses. We have staff in every major city in Australia. We can help you no matter where you are located.
Our highly experienced team will work closely with you to find the best solution for your situation. You can trust our staff to deliver results and help you to resolve your financial problems. No matter what type of difficulties you’re going through, we’ll guide you through your options with professionalism and care.

An Important tip…

Act now!

Your company’s financial problems are likely to get worse. The sooner you get in touch, the better the chance Corporate Lifeline can provide a solution to get you back to trading competitively and profitably.

Contact Corporate Lifeline today.


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