Part 26A Restructuring Plans: A Practical Guide for Distressed Businesses

The process for a Part 26A restructuring plan typically involves:

1. A restructuring plan proposal is sent to creditors and shareholders and filed at court with an application for the convening hearing seeking leave to convene the meetings of the creditors and shareholders.
2. At the first court hearing, the court will examine the classes of creditors and shareholders. If satisfied, the court will confirm that a vote on the proposal may be conducted on a specified date ahead of a second hearing to sanction the plan (known as the sanction hearing).
3. The necessary information about the plan must be sent to creditors and shareholders (or advertised in a manner approved by the court) so that the creditors and shareholders can decide whether or not to support the proposal for the plan.
4. If the plan proposal is not challenged and no counter-proposals are permitted by the court, then the creditors and shareholders will vote on the proposal.
5. Subject to the requisite voting thresholds being met and the rules for imposing a cross-class cram down being complied with, the court will then schedule a sanction hearing at which it will consider if the necessary requirements have been met and will make a decision whether or not to approve the restructuring plan and make it binding on all affected creditors and shareholders.
6. Once sanctioned by the court, the plan is binding when it is published in the Gazette or when it is delivered to Companies House (as appropriate).

Since the introduction of Part 26A of the Companies Act 2006, there have been a number of key decisions made by the Court on restructuring plans as follows.

• Re Argo Blockchain Plc. This case appears to be the first use of a Part 26A restructuring plan for a company in the cryptocurrency sector.  Under the terms of the plan, an emergency funding facility would be provided by another company and related security, as well as Argo Blockchain’s senior unsecured notes due 2026, would be released.  The company providing the emergency funding facility would be provided with American depositary shares (ADS) representing 87.5% and noteholders would be issued with ADSs representing 10% of the ordinary shares in Argo Blockchain.  Therefore, shareholders’ current interests would be retained but diluted.  The court sanctioned the plan at a hearing on 10 December 2025. 
• Re Fossil (UK) Global Services Limited. This case appears to be the first time that a restructuring plan featuring a single class of creditors has been sanctioned by the court.  This plan sought to restructure debt issued by a US corporation however the plan company itself had been incorporated in England and Wales expressly for the purpose of accessing the UK’s restructuring regime.  The judge emphasised the importance of vigilance in circumstances where a plan is implemented that could be described as artificial, noting that this risk could amount to an abuse.  Key to allaying any concerns the judge had about the artificiality of the arrangements was that the plan did not violate any public policy considerations that underpin US bankruptcy law and that if a US court was asked to recognise the plan it was likely to do so favourably. 
• Re Madagascar Oil Limited. The plan company was part of a specialist oil and natural resources investment group based in Singapore.  The purpose of the plan was to enable production to restart at a large oilfield for which significant investment was needed.  There were only two plan creditors.  The court sanctioned the plan and also ordered an opposing creditor to pay costs on the indemnity basis because their conduct in opposing the plan had been both disproportionate and frivolous. 
• Re Poundland Limited. Since 1990, Poundland has become a well-known large-scale discount retailer with 800 stores.  Faced with the prospect of insolvency (in the sense that it was unable to pay its debts as they fell due), the court firstly permitted Poundland to convene meetings with 14 different classes of creditors to consider a Part 26A restructuring.  Ultimately, the court sanctioned the plan on the basis that all statutory conditions had been met and there was no unfairness in the plan such that the court should not exercise its discretion to cram down the dissenting creditors. 
• Re DSTBTD Limited. DSTBTD Limited traded under the name “Distributed” as an introducer of vetted freelance software developers to client projects via a digital platform.  It was a small company that had got into financial difficulties and it proposed to restructure its debt through a plan.  The court sanctioned the plan.  Of note is the judge’s comment: “it is pleasing to see that the machinery of Part 26A is being successfully used by a small company in evident financial distress, and that the jurisdiction is not the preserve of the large corporation”.
• Re River Island Holdings Limited. River Island is a well-known high street clothing and accessories business.  It operates in the UK and Ireland through physical stores, its website and via third party sellers.  It was experiencing financial difficulties and it was forecast to be unable to pay its debts by August/September 2025.  The proposed plan was part of a wider restructuring plan to implement cost-cutting measures and restore the entire group (which included the plan company) to financial stability.  The court sanctioned the plan using its cross-class cram down powers.
• Re Waldorf Production UK Plc. A restructuring plan was proposed by this company which was engaged in the exploration and production of oil and gas in the UK.  The plan proposed a compromise of the right of bondholders and extinguishing unsecured debt (including debt owed to HMRC) in return for a 5% payment plus contingent profit sharing.  In refusing to sanction the plan, the court found that the plan company had given insufficient weight to the views of the dissenting unsecured creditors, had failed to engage with them and had not taken into account their contribution to the benefits of the restructuring.  Therefore, the plan company had failed to show that the plan was fair. 

In addition to the case of Re Waldorf Production UK Plc mentioned above, there have been other court decisions involving HMRC as a creditor.  Whilst in the cases of Re Houst Limited and Re Prezzo Investco Limited, the court was prepared to use Part 26A to sanction the plans, in two subsequent cases (Re Nasmyth Group Limited and Re Great Annual Savings Co Limited), the court has refused to sanction restructuring plans. 

From these decisions it seems that:

• If HMRC wishes to challenge a restructuring plan, it will be expected to attend and take an active part in the sanction hearing even if it does not put in its own valuation evidence.
• The court will give considerable weight to HMRC’s objections, especially where it is a major creditor.
• The court will not give a green light to companies wishing to use Part 26A to avoid paying tax.
• Plans that HMRC are likely to oppose must be supported by robust evidence and demonstrate a reasoned and fair distribution of returns.