UK restructuring plan - Key themes and what lies ahead

In June 2020, the Corporate Insolvency and Governance Act 2020 introduced a new tool into the UK restructuring toolkit, the restructuring plan, under Part 26A of the Companies Act 2006. 

Over the past two years, the restructuring plan has been embraced by practitioners and companies as a versatile implementation tool. It has been used by UK and foreign companies for a variety of purposes, from implementing financial and operational restructurings to facilitating administrations.

In a recent IFLR article, business restructuring partner Matthew Czyzyk and we examined some of the key themes, points of interest, and what might lie ahead for the restructuring plan, including:

• The relatively low bar of the “financial difficulties” test.
• The continued popularity of the “cross-class cram-down”.
• The first use of the “cram-out” mechanism in Re Smile Telecoms.
• The distribution of “restructuring surplus”.
• The recent departure from the statutory order of priority under the “relevant alternative” in Re Houst Ltd.

Looking ahead, it remains to be seen how the courts will balance transparency and disclosure requirements whilst ensuring the accessibility and utility of the restructuring plan, to what extent the courts will allow dilution of dissenting in-the-money stakeholders, and how the restructuring plan will be recognised outside the UK.

Please click here for the full article, and contact Natalie, Matthew, Emily, or any other member of the Ropes & Gray London business restructuring team if you have any questions or want to learn more.