Vol 16 (2019) - Issue 1

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High Court Finds that a Form of Holding DOCA Does Not Sidestep Part 5.3A of the Corporations Act

Synopsis

1. DOCAs can be proposed for the sole purpose of securing a moratorium on claims if other disclosure and statutory requirements are met.
2. DOCAs can be proposed as part of a recapitalisation or restructuring, even if the specifics of the balance sheet or operational terms remain to be determined. This is particularly so when the recapitalisation seeks to protect value in the exchange listing of an entity (protecting the prospects of a shell restructure).
3. The Courts recognise that the primary stakeholders in determining the fate of companies under administration are majority creditors voting in plenary.
4. The Courts recognise that, once a DOCA has been entered into, the onus moves to dissatisfied minority creditors to prove oppression, unfair prejudice or some other form of invalidation of a DOCA on substantive rather than procedural grounds