$11 million owed to the ATO, a $5 million promise, a critical vote from a creditor with nothing to gain, and a director in Dubai.
A company director proposes a deed of company arrangement. The funding entity has no apparent benefit from the DOCA but votes in favour. The director defaults on payments and leaves the country.
That was Deputy Commissioner of Taxation v McCabe [2026] FCA 395.
The facts
Three construction companies, Adcon VIC, Adcon ACT and Adcon Logistics, all controlled by one director, Mr Isaac [2]. Combined ATO debt exceeding $11 million. Part of a wider group owing $238 million to the ATO [3].
Mr Isaac proposed a pooled DOCA in August 2024 [11]. He would contribute $5 million in eight quarterly instalments of $625,000 [20(d)]. The money was coming from Busifund, an entity whose relationship with Mr Isaac is obscure [21].
Busifund’s vote was critical (46.25% of debt owed). Without it, the DOCA would not have passed for any entity [15-16]. Busifund was an excluded creditor. It gained nothing from the DOCA [15]. The deed administrators had recommended against it [4].
Mr Isaac left Australia in 2023. Whereabouts unknown, suspected Dubai [5]. The September 2025 instalment was late. December 2025 and March 2026 were not paid at all [22]. He provided no assistance to the deed administrators [24]. His solicitors ceased acting two weeks before the hearing [5].
The decision
Moore J terminated the DOCA under s 445D(1)(d) of the Corporations Act 2001 - material contravention [29].
The breach was sufficient on its own. The $5 million contribution was the core of the DOCA. Without it, the purpose was undermined [29]. Nothing weighed against termination. The companies were not solvent. The DOCA was not returning them to health [30].
Three further observations. First, funds already paid were not repayable on termination and remained available to creditors [30]. Second, continuing the DOCA would thwart investigation and recovery actions by liquidators [30]; deed administrators lack the full range of investigative and enforcement powers that liquidators have [31]. Third, $108 million in property, plant and equipment previously on Adcon VIC’s accounts had disappeared without adequate explanation [25]. Books and records were allegedly destroyed in the 2022 Brisbane floods [26]. These matters justified investigation [31].
The practitioner takeaway
A DOCA funded by instalments from a director is only as good as the director’s compliance. Default on the payment obligation is a straightforward ground for termination under s 445D(1)(d).
Creditor voting patterns matter. When the outcome depends on entities with no apparent benefit, courts will treat that support with caution [21].
And deed administrators are not liquidators. If investigation is warranted, keeping a DOCA on foot may prevent the very enquiries creditors need.
General information only. This note was accurate when written. The law may have changed since and the note is not updated. It is not legal or tax advice, does not take account of your circumstances and must not be relied upon as a substitute for advice on your own matter. If the issue is live for you or your client, email arda@nortonquaytaxlaw.com.au for advice on the current position.