The phrase “Holding DOCA” coupled with the noun “Mighty River” should send chills down the spines of even the most seasoned practitioner.
That’s the warning coming from the recent High Court (“HC”) Special Leave application on 19 February 2018.
Mighty River (“MR”) managed to obtain special leave to have the HC decide on whether the Holding DOCA (“HDOCA”) should be set-aside.
ASIC RG 82 explains that a HDOCA gives an Administrator time to investigate the company’s affairs, develop restructuring proposals, etc, without needing to extend the convening period.
The HDOCA typically contains no guarantee of a return to creditors, but cannot run indefinitely. So why the chills? MR attempted to characterise s444A(4)(b) (Corporations Act) as requiring a DOCA to particularise the available property/asset for creditors.
This characterisation would likely cause a whole range of DOCA’s (not just HDOCA’s) to be rendered void.
Examples: what about DOCA’s where creditor’s simply reduce the quantum of their debts or allow DOCA trade-on profits to pay debts over time? Etc
The HC also deals in some detail with whether HDOCA’s meet the objectives and purpose of Part 5.3A.
Worth a read. http://www.austlii.edu.au/au/other/HCATrans/2018/26.html
Thanks to Michael Murray for obtaining a copy of the HC transcript. He beat me to it 🙂
