HDOCA’s are valid, here’s why

Earlier today I announced on LinkedIn that the High Court had released its reasons for why it confirmed the validity of a Holding DOCA (“HDOCA”), in the Mighty River case.

Their Honours were (surprisingly) split 3:2.

I say “surprising” because the matter only took 5 minutes in Court.

Here is a link to the case.

What is a DOCA and a HDOCA?

DOCA = “Deed of Company Arrangement,” which is a proposal made to creditors to allow the company to continue in existence, and one that gives creditors a better return than a liquidation scenario.

HDOCA = a DOCA without a proposed guarantee of a return to creditors, but gives an Administrator time to investigate the company’s affairs and develop a restructuring proposal.

What was the Courts reasoning?

  1. The HDOCA was consistent with the objects of Pt 5.3A of the Corporations Act, was validly executed and conferred genuine rights and duties.
  2. It did not involve an impermissible side-stepping of s 439A(6) – the side-stepping was merely incidental to the purpose of the HDOCA.
  3. The HDOCA was not required to be declared void by s445G(2).
  4. Most importantly, s444A(4)(b) does not require property to be specified in the Deed.

#SVVoidables

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