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Selected cases

Federal Court of Australia · [2026] FCA 223

Frisken v E K Recruitment

A Federal Court insolvency case about poorly drafted DOCA and creditors trust documents, judicial advice and restructuring administration.

Federal Court of Australia9 Mar 2026

Plain-English explainers, not legal advice. Check the linked official source before you rely on a specific section, and get advice for your situation.

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Quick read

  • A DOCA and creditors trust can help a business exit external administration, but messy drafting creates expensive uncertainty.
  • A Federal Court insolvency case about poorly drafted DOCA and creditors trust documents, judicial advice and restructuring administration.

Use this to check

  • A creditors trust can speed a company's exit from administration, but only if the documents are clear.
  • DOCA terms, trust terms and guarantees should be drafted as one coherent transaction.
  • Court construction may fix uncertainty, but the Court may not be able to rewrite a terminated DOCA.

Decision snapshot

  1. 1

    What happened

    • EK Recruitment Pty Ltd entered voluntary administration in May 2020.
    • Creditors resolved to use a deed of company arrangement and creditors trust so the company could exit external administration quickly while creditors' claims were managed through a trust.
    • The DOCA, creditors trust deed and guarantee were executed on 23 June 2020.
    • The documents were not well drafted.
  2. 2

    What the court had to decide

    • The Federal Court had to give judicial advice on how to construe drafting issues in a DOCA and creditors trust deed, and consider whether it had power under insolvency or corporations legislation to vary trust or DOCA terms after the administrator's role had ended and the DOCA had terminated.
  3. 3

    What the court decided

    • The Court gave judicial advice on the construction of the DOCA and trust deed, including how the fund, transfer, creditor claims and trust fund should be treated.
    • It resolved the drafting issues by construction and did not accept that the broader variation powers could be used to rewrite the documents after the DOCA had terminated and the administrator role had ended.

Practical impact

Practical read

  • A DOCA and creditors trust can help a business exit external administration, but messy drafting creates expensive uncertainty.
  • The deed needs to say exactly what money is being paid, when creditor claims convert, who receives the fund and what happens if the fixed amount or tax debt changes.

Useful next steps

  • A creditors trust can speed a company's exit from administration, but only if the documents are clear.
  • DOCA terms, trust terms and guarantees should be drafted as one coherent transaction.
  • Court construction may fix uncertainty, but the Court may not be able to rewrite a terminated DOCA.
  • ATO and superannuation guarantee debts need careful treatment in any restructure.
  • Define the fund, bank account, fixed amount and trust fund consistently.

Practical read

This is a specialist insolvency case, but the business story is easy to understand. The company wanted the practical benefit of moving out of external administration quickly. A DOCA and creditors trust were used to do that. Years later, the trustee needed court guidance because the documents did not clearly say how key parts of the structure worked.

The Court could resolve many issues by construing the documents. But it also made clear that the broader variation powers relied on were not available in the way the trustee preferred, because the plaintiff was no longer administrator and the DOCA had already terminated.

For business owners and advisers, the lesson is to treat restructuring documents like operating documents, not templates. The fund, fixed payments, tax debts, creditor conversion, guarantees, deadlines and trustee powers must be clear enough to administer years later.

Checks to run

Key points

  • Define the fund, bank account, fixed amount and trust fund consistently.
  • Say exactly when creditor claims are discharged and converted into trust claims.
  • Align the DOCA, trust deed, guarantee and creditor report before creditors vote.
  • Model ATO, superannuation guarantee and unsecured creditor outcomes before signing.
  • Keep the administrator and trustee roles clear when one person wears both hats.

Key takeaways

  • A creditors trust can speed a company's exit from administration, but only if the documents are clear.
  • DOCA terms, trust terms and guarantees should be drafted as one coherent transaction.
  • Court construction may fix uncertainty, but the Court may not be able to rewrite a terminated DOCA.
  • ATO and superannuation guarantee debts need careful treatment in any restructure.

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