Re Waldorf Production UK Plc: High Court Sanctions Part 26A Restructuring Plan Despite HMRC's Opposition

Waldorf was part of an oil and gas group operating in the UK’s Continental Shelf. 

This wasn’t Waldorf’s first attempt at getting the court to approve a restructuring plan. 

The company’s first plan (RP1) was proposed after the group suffered financial difficulties following the introduction of the UK Energy Profits Levy (EPL). 

In August 2025, the court refused to sanction RP1 on the basis that there had been inadequate engagement with unsecured creditors and RP1 did not provide those creditors with a fair share of the restructuring benefits.

After the failure of RP1, a wholly-owned subsidiary of Harbour Energy Plc agreed to purchase most of the Waldorf Group for $205 million, with $85 million allocated to Waldorf. 

The offer was conditional on the group’s EPL liabilities being extinguished, as well as other unsecured liabilities to an M&A creditor.  Against that context, Waldorf formulated and negotiated a new plan which included a 2-day mediation attended by all plan creditors except for HMRC who chose not to participate. 

The second plan (RP2) was launched in December 2025. 

There were 4 creditor classes, and 3 approved RP2 with overwhelming majorities or unanimously.  HMRC was in a class of its own and voted against RP2. 

HMRC mounted a full challenge to RP2 using both jurisdictional and fairness arguments, as summarised below.

The court rejected all of HMRC’s objections.  The court held that it had the jurisdiction to cram down HMRC where the statutory obligations are met and the plan is fair because:

• Otherwise HMRC would be able to veto any plan it rationally opposes, which could not have been the intent behind, and would not support the rescue purpose of Part 26A which requires the court to take account of the overall fairness of the plan;
• Part 26A contains no carve-out for HMRC; and
• HMRC had never raised this objection before, whether in previous restructuring plan cases where it had been crammed down (e.g. Re Houst and Re Prezzo) or in the context of RP1.

In regards to the “no worse off” test, the court applied the Court of Appeal’s decision in Re Petrofac and held that this test “must be confined to the creditor’s existing rights as a creditor that are being compromised by the plan” but excluding any rights, interests or liabilities not being compromised by the plan. 

In Waldorf’s case, possible future tax receipts affected by Harbour’s use of the Waldorf group’s tax losses were not part of HMRC’s existing rights as a creditor and therefore could not be taken into account for the “no worse off” test. 

When considering only the EPL liabilities, all parties accepted that HMRC would be better off under RP2, recovering 14% instead of 0.1% in the relevant alternative, which involved insolvency, cessation of trading and possible Treasury exposure to decommissioning costs. 

Although the tax losses were not relevant to the “no worse off” test, the court accepted that they could be relevant to discretion and fairness since their preservation was commercially important to Harbour’s purchase of the Waldorf group. 

However, the court was satisfied that RP2 reflected the best available deal, followed extensive creditor negotiations, treated HMRC consistently with the other unsecured creditors, and gave HMRC a better return than the relevant alternative. 

The court also rejected HMRC’s contingent payment proposal, under which Harbour’s use of the tax losses would have been contingent on the payment of Waldorf’s EPL liabilities. 

The court held that there was no logical reason to treat HMRC differently from the other unsecured creditor, which had agreed to RP2, and requiring renegotiation “would risk losing the deal, which would be highly prejudicial to all the other stakeholders”.