A new era for restructuring challenges

Restructuring plans under Part 26A of the Companies Act 2006 are a relatively novel feature of English law, having come into force pursuant to the Corporate Insolvency and Governance Act 2020. While the law in the area builds on similar provisions in relation to schemes of arrangement and company voluntary arrangements, the case law has developed apace in the past five years and continues to do so.

A number of recent and high-profile restructuring plans in relation to retail businesses have brought the development of the law in the area into public focus. In both the Poundstretcher and TG Jones restructuring plans (sanctioned on 12 June 2026 and 1 July 2026, respectively), the Court approved the terms of the plan notwithstanding opposition from certain classes of landlord creditors. 

By way of illustration, the Poundstretcher plan involved the restructuring of approximately 298 leases, with no planned store closures, but required rent reductions ranging from 25% to 75% (or to nil at certain sites). It received support from creditors representing 93% by value of those voting, despite opposition from six landlord classes. By contrast, the TG Jones plans, concerning the former WH Smith high street business, were more extensive, involving over 1,000 creditors and providing for the closure of up to 150 stores, together with substantial rent concessions across the retained estate.

However, in sanctioning the Poundstretcher restructuring plan, Hildyard J noted that “Plans such as this which depend in the event on the Court overriding the views of a number of Landlord classes and imposing on them terms which they reject require sceptical and especially detailed review”.

Against that background, and at a time of developing case law, practitioners advising opposing creditors may now consider whether there are grounds to challenge restructuring plans proposed by corporate debtors where their clients oppose the terms being offered. Practitioners advising companies looking to propose such restructuring plans will need to give increased thought to how the benefits which might flow from the restructuring are to be shared among even those creditors who may not stand to benefit in the event that the company goes into liquidation. It therefore looks likely that we may see a new era of challenges to complex restructuring plans in the next few years, with practitioners advising creditors increasingly prepared to challenge plans proposed by corporate debtors.

Background

In summary, restructuring plans are a court-sanctioned compromise or arrangement between a company and its creditors. Restructuring plans are available to companies which have encountered, or are likely to encounter, financial difficulties affecting their ability to carry on business as a going concern. The purpose of a restructuring plan is to alleviate the effect of such financial difficulties on the company.

For the purposes of voting on a restructuring plan, creditors of the company are placed into different classes. The court may sanction a restructuring plan if at least 75% in value of each class of creditors vote in favour. However, if one class of creditors votes against the plan, the court may nevertheless sanction the plan by exercising what is known as the cross-class cram-down power. Provided that certain conditions are satisfied, dissenting creditors can therefore be forced to accept the terms of the proposed restructuring even if they vote against it.