Pacquola Group Pty Ltd - Case Update

An administrator has obtained an order essentially varying the terms of a DOCA before it was executed.

At the second meeting of creditors for Pacquola, a resolution was passed in favour of a DOCA advanced by the company’s director. The administrator subsequently identified that the wording of the DOCA proposal gave rise to three fundamental issues which undermined the effectiveness of the DOCA, may have unintentionally put employee creditors in a worse position, and meant that the DOCA, if executed, would not conform with the Corporations Act 2001 (Cth).

The Court noted there is no mechanism in Part 5.3A of the Act which enables an administrator to vary the terms of a DOCA before it is executed, but made the declarations sought by the administrator pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) that he was justified and acting reasonably in executing the proposed DOCA containing additional provisions designed to address the issues identified.

Read the decision here.