Waldorf Production UK Plc: court sanctions restructuring plan and crams down HMRC for the first time under Part 26A

In a significant decision handed down on 5 May 2026, Mr Justice Michael Green sanctioned the restructuring plan of Waldorf Production UK Plc ([2026] EWHC 1014 (Ch)), exercising the cross-class cram-down power under s.901G of the Companies Act 2006 against HMRC. The judgement is notable as the first in which HMRC has expressly argued — and failed — that its constitutional mandate to collect taxes renders it immune from cram-down.

Waldorf Production UK Plc is an oil and gas company holding licence interests in the North Sea, including the Kraken Field and the Greater Catcher Area. Its financial difficulties stemmed principally from unpaid Energy Profits Levy ("EPL") liabilities totalling approximately US$94 million, compounded by the payment of a US$76 million dividend in October 2022 — four months after EPL was introduced — which Hildyard J had criticised sharply when refusing sanction to an earlier restructuring plan (RP1) in August 2025.

The present plan arose following a sale and purchase agreement with Harbour Energy plc's subsidiary, Chrysaor Holdings Limited, for US$205 million (less leakage) for most of the Waldorf group. Harbour's offer was conditional upon the extinguishment of the EPL liabilities. Three of four creditor classes voted unanimously in favour; HMRC, meeting alone as its own class, rejected the plan.

HMRC's jurisdictional argument rejected

HMRC raised, for the first time in absolute terms, the contention that the court lacked jurisdiction to cram it down where it had rationally resolved to oppose the plan. The judge rejected this emphatically. A jurisdictional bar to sanctioning a plan without HMRC's consent would, he held, confer an effective veto inconsistent with the legislative intent behind Part 26A and the rescue culture underpinning English insolvency law. Relying on the Explanatory Notes to the Corporate Insolvency and Governance Act 2020 and the absence of any express carve-out, the court confirmed that the Crown is bound by Part 26A. HMRC's status as a public body and the rationality of its opposition were matters going to the exercise of discretion, not jurisdiction.

The no worse off test and the tax losses

HMRC's more substantial argument was that the "no worse off" condition in s.901G(3) could not be satisfied because Harbour intended to utilise approximately US$900 million of ring fence tax losses acquired with the group, shielding future profits and reducing Exchequer receipts. The judge, following the Court of Appeal's analysis in Saipem v Petrofac [2025] EWCA Civ 821, held that the test is confined to the financial value of the creditor's existing rights being compromised under the plan. Wider effects on the Exchequer — including future tax relief given to a third-party acquirer — fall outside that scope and are relevant only to discretion.

On the facts, the court found that even taking the tax losses into account, HMRC would not be worse off. Expert evidence established that full utilisation of both the accumulated ring fence losses (US$900 million) and the decommissioning-related forecast losses was not possible simultaneously. Mr McFarlane, HMRC's own specialist witness, accepted in cross-examination that challenges to full utilisation existed. The sensitivity analysis agreed between experts demonstrated that, in all but one implausible scenario, the Exchequer would be better off under the plan than in the relevant alternative — which itself would have involved a going-concern sale of the loss-rich subsidiaries.

Fairness and discretion

The judge acknowledged that the preservation of valuable tax losses was a benefit generated by the restructuring and could legitimately be weighed in the fairness analysis. However, given his factual finding that the Exchequer stood to benefit overall, there was no basis to deny sanction or to impose HMRC's proposed "contingent payment" mechanism — a form of deferred TTP linked to loss utilisation — which would have fundamentally altered a heavily-negotiated agreed compromise to which all other creditors had subscribed.

HMRC's refusal to attend a two-day mediation in October 2025 drew measured criticism. The judge noted that it was HMRC's complaint in RP1 that the plan company had failed to engage meaningfully with unsecured creditors, yet HMRC then declined to participate in precisely the sort of forum it had called for.

Significance

The judgement confirms that HMRC holds no privileged immunity from cram-down under Part 26A, however rational its opposition. It also establishes clearly, following Petrofac, that the no worse off condition does not extend to consequential Exchequer impacts from a purchaser's future exploitation of acquired tax reliefs. Floodgates concerns were addressed directly: any future plan seeking to compromise tax liabilities must still satisfy the jurisdictional conditions of Part 26A and demonstrate overall fairness to the court's satisfaction.