When a business faces insolvency, it doesn’t always mean the end. For many Australian companies, a Deed of Company Arrangement (DOCA) offers a structured way to manage debts, protect assets, and keep trading.
A DOCA is a formal agreement between a company and its creditors, setting out how the business will repay outstanding debts over time. It’s a key part of the voluntary administration process giving viable businesses a second chance to recover.
In this guide, we’ll break down what a DOCA is, how it works, and how bridging loans or short-term finance can provide the essential funding to make your restructuring plan succeed.
What Is a DOCA?
A Deed of Company Arrangement (DOCA) is a legally binding agreement between a company and its creditors that outlines how debts will be managed or repaid after voluntary administration.
The purpose of a DOCA is to:
- Allow the business to continue trading.
- Maximise the return to creditors compared to liquidation.
- Provide a structured repayment path to restore solvency.
It’s one of the most effective ways to avoid liquidation while satisfying creditor claims under controlled, transparent terms.
When Is a DOCA Used?
A DOCA is typically considered after a company enters voluntary administration (VA) a process where an independent administrator reviews the company’s financial position and recommends one of three outcomes:
- End administration and return control to the directors.
- Execute a Deed of Company Arrangement to restructure and repay debts.
- Liquidate the company.
If the business is fundamentally viable but struggling with cash flow or accumulated debt, a DOCA can offer a lifeline.
How the DOCA Process Works
Here’s a simplified outline of the steps involved:
1) Enter Voluntary Administration
Directors appoint an independent administrator to assess the company’s financial situation.
2) Creditors’ Meetings
Two meetings are held: - The first meeting confirms the administrator’s appointment.
- The second meeting determines the company’s future whether to enter liquidation or execute a DOCA.
3) Drafting the DOCA Proposal
The administrator, directors, and legal advisors draft a proposal outlining: The total amount of debt.
- The percentage creditors will receive.
- The timeframe for repayment.
- Any lump-sum payments or funding sources (such as bridging loans).
4) Creditor Vote
Creditors vote on the proposal. If a majority (by number and value) support it, the DOCA is accepted and becomes legally binding on all creditors.
5) Implementation and Monitoring
The administrator oversees the DOCA’s execution, ensuring payments are made as agreed.
Benefits of a DOCA
A Deed of Company Arrangement can deliver significant advantages for both the company and its creditors:
1) Keeps the Business Trading
Directors can continue operating, preserving jobs and customer relationships.
2) Avoids Liquidation
A DOCA allows time to repay debts and restructure operations without selling assets.
3) Protects Directors
By resolving debts, it reduces the risk of Director Penalty Notices (DPNs) and personal liability.
4) Provides Certainty for Creditors
Creditors receive a structured, agreed outcome rather than uncertain liquidation proceeds.
5) Improves Long-Term Viability
With a clear repayment plan, the company can stabilise and rebuild.
How Bridging Loans and Short-Term Finance Can Support a DOCA
One of the biggest challenges in executing a DOCA is funding the proposal. Creditors are more likely to approve a DOCA that includes upfront payments or reliable funding sources and that’s where bridging loans come in.
1) Funding Lump-Sum Payments
Short-term loans can provide the capital needed to make an immediate or partial payment to creditors, increasing approval odds.
2) Demonstrating Financial Commitment
Access to private finance shows creditors that directors are committed to resolving debt and maintaining business continuity.
3) Maintaining Cash Flow
While the DOCA is implemented, bridging finance ensures daily operations continue without disruption.
4) Buying Time to Refinance
Short-term funding gives breathing space to secure longer-term finance once the company stabilises.
5) Flexible, Fast Approval
Unlike traditional lenders, private finance providers can assess and settle loans in 24–72 hours crucial when facing tight deadlines in the DOCA process.
Case Study: Using Bridging Finance to Fund a DOCA
A Sydney-based construction company entered voluntary administration after accumulating $600,000 in unpaid tax and trade debts. The administrator recommended a DOCA to repay creditors over six months.
Using bridging finance secured against property, the directors raised an upfront payment covering 40% of total debts, satisfying the ATO and major suppliers. The DOCA was accepted, liquidation was avoided, and the company refinanced within the year.
This example highlights how fast access to short-term finance can turn a DOCA from a proposal into a practical recovery strategy.
Key Considerations for Directors
If you’re considering a DOCA, keep these points in mind:
- Work closely with a registered administrator or insolvency practitioner.
- Be transparent about your financial position and repayment ability.
- Use credible funding sources (bridging loans, investor capital, or refinance) to strengthen your proposal.
- Act early options narrow as insolvency progresses.
DOCA vs. Liquidation: What’s the Difference?
Why Acting Quickly Matters
The earlier you explore restructuring options, the better your chances of success. Once liquidation proceedings begin, opportunities to implement a DOCA or secure finance become limited.
If you’ve entered voluntary administration or your business is on the brink, fast bridging finance can provide the capital and confidence to build a workable recovery plan.
Final Thoughts
A Deed of Company Arrangement (DOCA) gives Australian businesses a fighting chance to recover, restructure, and move forward. When combined with short-term or bridging finance, it can transform a plan on paper into a successful turnaround strategy.
At Bridging Loans, we specialise in urgent business finance that supports DOCAs, tax debt settlements, and restructuring plans. Our team works fast, communicates clearly, and delivers funding when it matters most.
If your company is preparing a DOCA or in voluntary administration, contact us today. We can help fund your proposal, protect your business, and set the stage for recovery.