Deed of Company Arrangement: Maximise your chances of business survival
As business owners ourselves, the AVA Advisory team understands the weight of financial uncertainty. When your company faces difficulties, you need more than just advice. You need a clear path forward. Our Deed of Company Arrangement (DOCA) service helps directors like you take early, decisive action during voluntary administration. We’ll work alongside you to assess your eligibility and develop an effective arrangement that could help save your business.
What is a Deed of Company Arrangement?
Deeds of Company Arrangement (DOCAs) offers struggling businesses a lifeline. It’s a legally binding agreement between your company and its creditors that could help you rebuild your business’s future while avoiding liquidation. Think of it as a fresh start – one that lets you keep trading while restructuring your debts in a manageable way.
Deeds of Company Arrangement (DOCAs) offers struggling businesses a lifeline. It’s a legally binding agreement between your company and its creditors that could help you rebuild your business’s future while avoiding liquidation. Think of it as a fresh start – one that lets you keep trading while restructuring your debts in a manageable way.
What are the advantages and features of DOCAs?
Our practical approach to a Deed of Company Arrangement focuses on real outcomes for your business:
Breathing space
A DOCA gives you valuable time to restructure while protecting your business from creditor actions. You’ll get the space needed to implement meaningful changes that could secure your company’s future.
Business continuity
Operate the business while the VA process is underway, saving jobs and maintaining customer relations.
Better financial outcomes
DOCAs often deliver better returns for everyone involved. Creditors typically receive more than they would through liquidation, while your company gets a more manageable payment structure.
United way forward
Once approved, your DOCA binds all unsecured creditors to the agreement. This creates one clear path forward, eliminating the stress of dealing with multiple creditor demands.
Eligibility requirements for DOCAs
While DOCAs offer flexibility, your business needs to meet certain criteria to qualify:
- Your company must be under Voluntary Administration
- You need to demonstrate financial distress or insolvency
- Your DOCA proposal must aim to either maximise survival chances or provide better returns for creditors than liquidation
- The DOCA requires approval from 50% of creditors by both number and value of debt
If creditors approve your proposed DOCA, you must sign it within 15 business days.
Our AVA Advisory team understands these requirements inside out. We’ll help you assess your eligibility and guide you through each step of the process.
If you’re not eligible, alternative options include:
Safe Harbour
Shield yourself from personal liability while we help develop and implement a structured business turnaround plan.
Voluntary Administration
Continue with the traditional Voluntary Administration (VA) process to get breathing space to assess your business’s viability and explore recovery options.
Small Business Restructuring
Perfect for viable small and medium businesses with debt under $1 million. Keep trading while restructuring debt and working towards recovery.
Liquidation
When needed, we’ll provide a structured, dignified path to wind up operations.
If you’re not eligible, alternative options include:
Facing financial distress? Our Safe Harbour experts help directors restructure, regain stability, and move forward with confidence – without the immediate risk of insolvency.
Experience that matters
Our entire team has built and run their own businesses. We understand firsthand the challenges you face as a director during financial difficulty. This unique perspective helps us deliver solutions that consider both your business and personal wellbeing.
Guidance you can trust
Our guidance combines deep technical expertise with practical business experience. We focus on creating clear, achievable solutions that work for your circumstances.
Support when you need it the most
Through our partnership with Beyond Blue, we offer both professional expertise and emotional support. Financial challenges can feel isolating, but with AVA Advisory on your side, you’re never alone.
The importance of DOCAs
Current market conditions have created unprecedented challenges for company directors. Our research has shown:
of SMEs with tax debt describe it as a significant or somewhat significant burden on their business
of SMEs say they’ve experienced an increase in costs since pre-COVID-19
of SMEs say they have a current ATO tax debt
Is DOCA right for your business?
Having built and run our own businesses, we know that every financial challenge is unique. While DOCAs can be powerful rescue tools, they’re not right for every situation. Your business might benefit from a DOCA if it:
- has a viable core operation with real potential for recovery
- faces temporary cash flow issues but maintains a solid customer base
- needs to restructure specific debts while continuing to trade
- could provide better returns to creditors than immediate liquidation.
Let us help assess your situation and explore whether a DOCA offers your best path forward. We’ll bring both our technical expertise and real-world business experience to help you make this crucial decision.
What is a Director Penalty Notice (DPN)?
A DPN is a formal notice issued by the ATO, holding directors personally liable for unpaid company tax obligations. These obligations may include:
A DPN is a formal notice issued by the ATO, holding directors personally liable for unpaid company tax obligations. These obligations may include:
Pay As You Go (PAYG) Withholding
Superannuation Guarantee Charge (SGC)
Goods and Services Tax (GST)
The DPN outlines the unpaid debt and actions required to avoid personal liability.
Types of DPNs: Which have you received?
The ATO issues two types of DPNs, each with specific implications:
21-day DPN (Traditional or Non-lockdown DPN)
Issued when tax debts are overdue but have been reported to the ATO within three months of the due date.
Directors have 21 days to act, with options such as:
Paying the debt in full.
Placing the company into liquidation or Voluntary Administration (VA).
Appointing a Small Business Restructuring Practitioner (SBRP), if total debts are under $1 million.
Directors have 21 days to act, with options such as:
Lockdown DPN
Issued when tax debts remain unreported or unpaid for over three months past the due date.
Directors are immediately personally liable for the debt, with no option to appoint administrators or liquidators to avoid liability.
Key Difference
A 21-day DPN provides time to act, while a Lockdown DPN imposes immediate personal liability.
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As a former director, can you be affected by a wind-up notice?
Even after stepping down as a director, you’re not automatically free from garnishee notice implications. The ATO can still hold you responsible for:
- PAYG withholding
- Superannuation Guarantee Charge
- Net GST liabilities
These responsibilities cover reporting periods that begun during your directorship.
If you learn of a garnishee notice affecting a company where you were previously a director, seek immediate advice to understand your position.
What are the advantages and features of DOCAs?
Our practical approach to a Deed of Company Arrangement focuses on real outcomes for your business:
Breathing space
A DOCA gives you valuable time to restructure while protecting your business from creditor actions. You’ll get the space needed to implement meaningful changes that could secure your company’s future.
Business continuity
Operate the business while the VA process is underway, saving jobs and maintaining customer relations.
Better financial outcomes
DOCAs often deliver better returns for everyone involved. Creditors typically receive more than they would through liquidation, while your company gets a more manageable payment structure.
United way forward
Once approved, your DOCA binds all unsecured creditors to the agreement. This creates one clear path forward, eliminating the stress of dealing with multiple creditor demands.
FAQs
Find answers to common questions about DOCAs.
As voluntary administrators, we assess your company’s potential for recovery. We’ll evaluate whether a DOCA would offer better outcomes than immediate liquidation. Our team’s combined experience as business owners and administrators helps us provide a thorough, practical assessment of your situation.
As your administrator, we’ll manage these crucial timelines:
- We’ll hold the creditors’ meeting within 25-30 days of our appointment as voluntary administrators
- If approved, you have 15 business days to sign the DOCA
- Missing this signing deadline could trigger automatic liquidation. Our team keeps the process on track and handles all statutory requirements.
Yes, there’s flexibility here. As your deed administrator, we can help negotiate modifications with creditors after signing, provided all parties agree to the changes. We’ll guide you through any proposed modifications and their implications.
Personal guarantees remain enforceable after we begin voluntary administration. Even if your company’s debt is cleared through the DOCA, this doesn’t remove your personal liability under any guarantees. Our team will help you understand and plan for these ongoing obligations.
As your deed administrator, we take charge of ensuring the DOCA runs smoothly. We manage creditor payments and lodge all required reports with ASIC. Our team handles the administrative burden so you can focus on running your business.
Non-compliance creates a default. If not addressed within the timeframe we set in our default notice, the DOCA is breached. This could lead to liquidation. That’s why our team actively monitors compliance and works with you to meet all requirements.
Still have questions?
Get in touch for more information.
Join us on the journey to resilience
At AVA Advisory, we believe that every business deserves the chance to not just survive but thrive. Our team is here to provide the expert guidance, personalised solutions, and empathetic support you need to overcome financial challenges and achieve long-term success. Whether you’re facing insolvency, struggling with debt, or looking for ways to improve your financial management, we’re here to help.
Say hello
Reach out to our friendly team for an obligation-free, cost-free consultation. Share details of your situation and concerns in confidence. Clarity, relief, and a brighter future for you and your business are only a few steps away.
