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    What is a DOCA?

    22/07/22 3:16 PM

    A Deed of Company Arrangement (DOCA) is a binding agreement between the directors, company, creditors, administrators and any other 3rd parties which stipulates how creditors will be paid and in what manner. A DOCA is a flexible agreement which is ultimately voted on by creditors. 

    FAQ1:- What is the minimum amount of tax debt to make a DOCA worthwhile? 

    • The reality is $100,000+ of tax debt can make a DOCA worthwhile.  

    FAQ2 - What are the costs of a DOCA? 

    • The costs of a DOCA vary depending on the complexity. We do not recommend a DOCA unless the outcome is commercial. 

    FAQ3 - How long does a DOCA take? 

    • The most amount of time is around the preparation of the DOCA and the project management of it. From start to finish it can be done in under 2 months however it can also take much longer depending on the complexity. 

    FAQ4 - Can a Director continue to run the company whilst a DOCA is being reviewed and proposed? 

    • Yes! In most cases the director(s) and administrators agree to have the business operate under license which ensures that the goodwill is protected especially if a DOCA is being proposed. 

    FAQ5 - Can I pick and choose different amounts to pay different creditors? 

    • Yes you can. In some cases, directors can choose who are critical creditors for future operations vs past creditors. These can be separated and paid different amounts from the Deed Fund. 

    FAQ6 - Who decides on the DOCA? 

    • Primarily the creditors do however in a case of a deadlock between value vs volume the Administrator has the casting vote. 

    FAQ7 - Is administration and a DOCA the same as Liquidation? 

    • No! They are different. Once a company goes into administration a DOCA can be proposed. Liquidation is a totally different process that usually follows administration if the DOCA fails or no DOCA is proposed.

    If you have any questions about the above, please feel free to contact Frank Law on (02) 9688 6023.

    This is not legal advice.