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Full Federal Court ruling bolsters protection for rescue financiers
DOCAs bind only pre-existing claims, leaving lenders free to enforce security for new loans advanced after a restructuring

The Full Federal Court has confirmed that a deed of company arrangement (DOCA) does not extinguish a secured creditor’s ability to enforce security for post-restructuring advances.
The decision arose from the administration of Specialised Welding Australia, a Kwinana Beach, WA-based fabrication engineering company. The case centred on whether additional advances made by lender John Grono after the DOCA’s effective date were released or rendered unenforceable under sections 444D, 444G and 444H of the Corporations Act 2001 (Cth).
In the months preceding the administration, Grono had advanced funds secured by a general security agreement and was owed nearly $4 million by the time the company entered administration on 7 November 2022. Grono voted in favour of the DOCA and made further advances after its execution under a deed of variation to the loan agreement and later appointed receivers. Blackbird First Mortgage Corporation, another secured creditor, argued that Grono’s right to appoint receivers was extinguished under the DOCA, while Grono took the position that the deed of variation gave rise to a new and discreet claim post-dating the DOCA which was validly secured by at least the general security deed. The Court agreed with Grono, finding that the obligation to repay the post-DOCA advances was created by the deed of variation and that the DOCA did not extinguish Grono’s ability to enforce his security for post-restructuring advances.
Blackbird appealed on two grounds, arguing that because Grono supported the DOCA, section 444D(2) and clause 4 of the DOCA permanently barred him from enforcing his security, and that his later advances were “claims” released by the DOCA. The Full Court (Feutrill, Vandongen and Longbottom JJ) rejected both arguments. The Court held that clause 4 of the DOCA only restricted a secured creditor’s enforcement rights insofar as they related to claims arising before the DOCA’s specified date (7 November 2022). The clause did not extinguish the security interest itself or prevent enforcement for new post-DOCA obligations. The Court emphasised that s 444D(2) preserves secured creditors’ property rights except to the limited extent the deed expressly provides otherwise.
On the second issue, the Court found that Grono’s post-DOCA advances created new obligations under the deed of variation, not contingent liabilities arising under the pre-DOCA loan. The original facility was “exhausted” at the time of administration, and the obligation to repay later advances arose independently after the DOCA took effect. As such, these amounts were not “claims arising on or before” the relevant date and were unaffected by the DOCA’s release provisions.
In affirming the primary judge’s reasoning, the Court concluded that Grono validly enforced his security over post-DOCA advances and that Blackbird’s appeal should fail, clarifying that a DOCA cannot retrospectively extinguish new lending or future-advance rights under existing securities. Blackbird was ordered to pay Grono’s costs.
Konrad De Kerloy SC of Fourth Floor Chambers and Shane Murphy of Francis Burt Chambers (instructed by McNally & Co) represented John Grono, while Paul Edgar SC of Quayside Chambers and Wayne Zappia of Shoreline Chambers (instructed by Mendelawitz Morton) represented Blackbird First Mortgage Corporation.