Freshfields 8th October - Event write up

Over 80 delegates joined TMA UK on 8 October 2025 for the organisation’s latest event, which proved to be a thought-provoking discussion on five years’ worth of restructuring plans.

The event began with a Freshfields panel consisting of Richard Tett, Caroline Platt and Kevin Connolly from Freshfields’ restructuring and insolvency team. The panel delivered a brief history of restructuring plans before focusing on various points of interest, particularly those arising from recent Court of Appeal decisions.

Richard first provided an overview of restructuring plans, explaining how the plan was introduced five years ago amidst Covid legislation and has proven to be a very powerful tool for restructurings due to the new power of cross class cram down. While acknowledging the drawbacks of recent Court of Appeal cases which has created some uncertainties, he stressed the positive impact restructuring plans have had in restructurings, also to bring creditor groups to the table, a topic visited again later in the session. Richard then touched on the key characteristics of restructuring plans, noting the similarities and differences versus schemes of arrangement, and he highlighted that the major takeaway from their introduction was the introduction of cross-class cramdown.

Discussion then turned to an outline of the different uses of restructuring plans, before Kevin addressed cross-class cramdown in more detail. Kevin discussed the legislative conditions required to satisfy the use of cross-class cramdown and their interpretation by the courts.

The panel examined two particularly pertinent points in relation to cross-class cramdown – the ‘relevant alternative’ and the ‘no worse off test’. On the former, they noted that the courts have been clear that, when a rival deal is put before the court as the relevant alternative (instead of the alternative proposed by the company), it must be sufficiently certain and have a reasonable chance of being implemented within the timeframe available. On the latter, the panel considered that, in determining what factors can be considered for assessing the ‘no worse off test’, the court looks at the financial value of (i) the creditors’ rights in the relevant alternative compared to (ii) their new or modified rights under the proposed restructuring plan – collateral interests do not form part of the consideration.

Noting the very short legislative provision leaving much of the interpretation of cross class cram down to the judiciary, the panel addressed how the court has exercised its discretion in this area. The speakers noted that this has generated significant challenge and remains contentious given the legislative silence. The panel remarked that the natural byproduct of such silence is that guiding principles have been developed incrementally through case law and that case law has not always been going in the same direction.

It started with the “economic ownership model”, namely that the “in the money” creditors can decide how the restructuring benefits are allocated, with “out of the money” creditors only being entitled to a nominal share to satisfy the legislative hurdle of a “compromise”. However, it has recently moved to the courts considering (i) the “contributions” made by each stakeholder to the benefits generated/preserved by the restructuring, and then (ii) whether the resulting allocation of those restructuring benefits was fair.

The panel further noted that the courts were also concerned to see that there had been a genuine attempt to negotiate a reasonable compromise between all stakeholders before utilising cross class cram down. Whether this test will remain is to be seen – with one possible appeal to the Supreme Court in Petrofac having settled and one further leapfrog appeal in Waldorf currently uncertain as to progression.

Kevin briefly touched on how costs are awarded in the context of restructuring plans, citing the useful guidance provided in both Petrofac and Thames Water.

Caroline then offered some practical guidance on how to best navigate plans from the perspective of both the plan company and opposing creditors. She touched on the impact of the new Court practice statement published in September. In particular, she noted that the new requirements of issuing a claim form and filing a listing note at the time of booking court hearing dates are likely to front-end the court process, resulting in companies being required to provide more information to affected parties at an earlier stage in the process. Caroline reiterated the importance, following the recent cases, of providing evidence to the court of (i) the restructuring benefits, (ii) justifying the allocation of those benefits, and (iii) demonstrating that a true attempt at striking a bargain with dissenting parties had been undertaken.

Caroline then discussed the use restructuring plans provide in the SMEs space and noted that the mechanism provides a flexible tool capable of facilitating proper bargaining subject to court review. She noted the differences to a CVA where there is no court involvement, (absent a challenge) and that this can result in higher costs for a restructuring plan, but also gives greater certainty.

The panel noted that the perceived cost burden of plans isn’t a given as demonstrated through DSTBTD Limited’s recent restructuring plan. Tony Groom, Investment Partner at K2 Business Partners, was then invited by the panel to offer his unique and interesting perspective on the DSTBTD plan, which he had prepared.

Richard then brought the session to a close, noting that ultimately what the courts are looking for is fairness towards all parties. He revisited the uncertainty that recent Court of Appeal decisions have introduced, observing that it takes time for practice to settle – and that the restructuring plan is only five years old! He noted that “next year at this time we will hopefully have answers to the questions that vex us today”.

After the panel discussion, the attendees enjoyed networking over drinks and canapés.

This event was kindly hosted and sponsored by Freshfields.