Restructuring & Recovery


Holding DOCAs – Response to COVID-19 and current lockdowns

Holding DOCAs – Response to COVID-19 and current lockdowns

Wexted Advisors previously published an information sheet on Voluntary Administrations (VA) and Deed of Company Arrangement (DOCA) as an effective restructuring tool.  We now revisit the topic in the context of the uncertainty brought on by the COVID-19 pandemic and the July 2021 Sydney lockdowns.

Steps to undertake before considering any form of external administration

Before considering external administration, Directors should:

  • Review NSW and Federal Government website for financial support and assistance packages;
  • Consider any additional equity raise options in your business from existing or new investors;
  • Hold discussions with your key stakeholders, financier, landlord, ATO and key suppliers; and
  • Consider other cost saving initiatives.

Challenges raised by COVID-19

There are a number of challenges which continue to develop quickly as a result of COVID-19 and the current lockdowns.  These include:

  • Restrictions on trading resulting in immediate loss of revenue while expenses continue (i.e. rent, wages etc);
  • Uncertainty and lack of continuing government relief measures;
  • Uncertainty on timing of current and any future lockdowns, and ongoing impact on cashflow and business; and
  • What market conditions will look like going forward and when will revenue return to pre-COVID-19 levels.

What is a Holding DOCA?

Voluntary Administrator have up to 25 business days to convene the second meeting of creditors and form an opinion as to whether it is in creditors’ interests for the company to enter a DOCA, for the administration to end, or for the company to be wound up.

A DOCA is a binding agreement between a company and all its creditors, excluding except secured creditors, and usually proposed by the Directors, key stakeholders or an interested party.

The timeframe of the Administration process can be extended by seeking creditors’ approval of a Holding DOCA and avoids seeking an extension of the convening period from the Court.

Benefits of a Holding DOCA




  • Provides additional time for the director and Administrator to formulate a proposal to recapitalise the business in the interest of employees and creditors, without an application to the Court to extend the convening period.
Moratorium  on claims


  • Extended moratorium period on creditors’ claims, who are unable to take enforcement action against the company throughout the DOCA period.
  • An independent party can oversee the business and its operations during the period, providing stakeholders with an improved level of comfort, in maximising the likelihood of recapitalising the business and providing a greater return to creditors.
Resolution of claims
  •  Once COVID-19 subsides and lockdowns lifted, the Administrator can convene a further meeting of creditors to amend the Holding DOCA, to resolve creditors’ claims against the company.

Are Holding DOCAs valid?

Yes. The High Court in Mighty River International Limited v Hughes and anor (as deed administrators of Mesa Minerals Ltd) found that Holding DOCAs were consistent with the objective of Pt 5.3A of the Corporations Act 2001, given that their objective is to maximise the chance of the company’s survival or otherwise provide a better return to creditors than would result from a liquidation.

Separately, ASIC’s Regulatory Guide 82 recognises the use of Holding DOCAs, and provides that they should not be open-ended, and should include a mechanism for interim reporting.

What does the VA and Holding DOCA timeline look like

Appoint Administrator



  • The Administrator takes control of the company, the director’s powers are suspended and there is a moratorium in place.
  • This provides breathing space for the company to prepare a restructuring proposal.
  • The Administrator becomes responsible for the company’s affairs and trading.
1st meeting of creditors


  • Creditors vote on whether to replace the Administrator and form a committee of inspection.
  • Secured creditors retain their rights to formally appoint a Receiver during the first 13 business days.
VA report and investigations
  • The Administrator is required to undertake preliminary investigations, prepare a report and recommendation to creditors which compares the likely outcome of the Holding DOCA proposal versus a liquidation scenario.
  • This allows creditors to make an informed decision at the second meeting of creditors.
2nd meeting of creditors where future decided
  • Meeting to vote on the Holding DOCA.
  • The meeting can be adjourned by creditors up to 45 days, or prior to the meeting, a court approved extension may be granted if necessary to provide the DOCA Proponent additional time to develop the Holding DOCA to maximise the chance of the company’s survival and provide a better return to creditors.
Holding DOCA, Liquidation or end VA
  • The Holding DOCA is binding on all creditors, including those who voted against it (excluding the secured creditors).  The implementation of the Holding DOCA effectively places the company in a ‘holding pattern’ with oversight by the Deed Administrator to report to creditors and administer the DOCA.
Subsequent DOCA proposed
  • As Australia’s vaccination roll out continues in the coming months, current lockdown restrictions are eased and revenue returns, a clearer understanding of the business landscape will be known, allowing for a restructure through a Subsequent DOCA, to be considered by creditors.


The current lockdowns due to COVID-19 are severally impacting on sales and business cashflows.  Notwithstanding, the recent State and Federal Government Financial Support, this is an uncertain and challenging time for business owners and directors.

While Directors seek financial and legal advice and continue to explore all options available to them to ensure their business survives COVID-19 and the current lockdowns, we provide the Holding DOCA as an option for consideration.  The Holding DOCA provides the critical time needed for Directors to work with stakeholders under a formal framework, to maximise the chances of the company’s survival during these difficult and unprecedented times.

Wexted Advisors are Chartered Accountants who provide both informal restructuring (safe harbour, small business restructuring) and formal restructuring (Voluntary Administrations, DOCAs and Liquidations).  We work with Directors, and their trusted advisors, to assess the financial position of the Company and provide independent advice to maximise the chances of business survival.

For further information on our credentials and experience please visit our website Wexted Advisors Credentials or contact us below.

Please feel free to get in contact with either Joe HayesAndrew McCabe or Raj Goyal on (02) 9210 1700.

Click here to download the Holding DOCAs – Response to COVID-19 and current lockdowns brochure.