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