Lessons from 2025 and the road ahead
The UK restructuring plan is navigating a complex phase. Five years after the introduction of cross-class cram down, 2025 has seen UK courts refine their focus on fairness and strengthen evidentiary standards, impacting how deals are structured, negotiated, and contested. High-profile cases have shown that meeting the statutory 'no worse off' test is necessary but not enough; the court's discretionary, fact-sensitive assessment of fair allocation now drives outcomes. This shift is prompting market participants to rethink their strategies in both in-court and out-of-court processes.
Chapter 1 2025: Cases and caution
Throughout 2025, UK court judgments have aimed to differentiate between various types of plans, cautioning against direct comparisons when plans serve different purposes. But fairness—and whether cross-class cram down should be applied—remains a key theme requiring a fact-specific assessment.
Three pivotal decisions in 2025 highlight the year's evolution from earlier cases, like Virgin Active, where out-of-the-money classes were often given little weight once the relevant alternative was established.
First, the Court of Appeal upheld Thames Water's interim plan, highlighting that fairness can include intangible benefits like maintaining a going concern to transition to a second plan, while dismissing a strict 'de minimis only' approach to out-of-the-money stakeholders.
Thames demonstrated how alliances between corporate and senior creditor groups supporting the original plan can weaken dissenting classes' arguments for a fairer alternative—since those same creditors wouldn't support it—and launching competing plans is unnecessary and costly.
Second, the Court of Appeal overturned Petrofac's sanctioned plans on discretionary fairness grounds. When new money economics exceed market rates for post-restructuring credit, the excess must be justified with expert or market evidence.
Third, the High Court refused to sanction Waldorf's plan. Despite meeting jurisdictional requirements, sanction was denied due to a lack of meaningful negotiation and an unfair allocation to unsecured creditors, who bore much of the compromise.
These outcomes reveal a consistent trend. The UK court won't let cross-class cram down be used by assenting classes to claim an unfair share of restructuring benefits. It will examine who contributes to the preserved or generated benefits, what those benefits are (including non-financial ones), and whether the proposed distribution is fairly calibrated and backed by disclosure and expert analysis, not mere assertion.
Looking forward, the updated Practice Statement, effective from 1 January 2026, aims to streamline case management, enhance early engagement, and improve disclosure. Waldorf's expected appeal to the Supreme Court has been dropped after mediation, so no further appellate guidance will emerge from that case.
Chapter 2 From rules to principles: the post-Petrofac fairness framework
The legal landscape has shifted from a rigid adherence to alternatives to a more nuanced set of fairness principles that guide decision-making.
While the relevant alternative still serves as the foundation, the focus now is on whether the value generated or maintained by the plan is distributed equitably. This involves a close examination of dissenting groups and whether any deviations from insolvency expectations are commercially justified and well-documented. River Island exemplified this approach, showing how targeted evidence and strategic benefit-sharing can influence fairness decisions.
A practical development has been the rise—and now expectation—of allocation-of-benefits or "plan benefits" reports. These reports identify the restructuring surplus, explain its origins, benchmark new money pricing, and outline how value is intended to be distributed among classes. They have been pivotal in successful plans, including River Island, and post-Petrofac, they have become a key trend—almost essential—when new money or differential treatment is involved.
The 2025 cases have re-established plans around core principles: pari passu as the default, justified deviations based on contribution, and a focus on how the restructuring surplus is created and shared. This ensures that cram down acts as a fair compromise, not merely a value transfer by voting power.
Chapter 3 Rising contention: liability management exercises and enforcement pathways
As the evidential requirements and litigation risks around plans increased in 2025, the market's initial enthusiasm for in-court solutions has waned. Particularly, small and mid-sized enterprises haven't seen a rise in plan usage. Rising costs, complexity, and challenge rates from junior creditors have driven many companies towards out-of-court solutions.
The plan now carries more uncertainty. This isn't a flaw but a feature of a fairness-driven model, explaining why alternative implementation routes are expanding.
US-style liability management techniques—non-pro rata deals, uptiers, drop-downs—have gained traction in Europe, intensifying creditor conflicts. Liability Management Exercises (LMEs) offer speed, contractual execution, and no court dates, often forcing challengers to commit significant capital post-event, making them hard to reverse.
Proposing or executing these transactions creates leverage and can spark negotiations. However, cases like Hunkemöller, Selecta, and Victoria show how quickly these transactions face multi-forum challenges, undermining their speed advantage. The growing use of cooperation agreements by creditors adds another layer of risk to execution.
Additionally, "ICA-drag," distressed disposals, and pre-pack administrations have re-entered the mainstream as companies and creditors seek greater execution certainty. Yet, like LMEs, fairness challenges persist in these pathways too, whether under English abuse-of-power principles, directors' duties, valuation disputes, or contractual challenges.
This isn't merely a swap of court for contract. For companies, plans and LMEs are now two sides of the same coin, to be considered together with fairness considerations shaping both.
Chapter 4 The forum question
The UK's approach to fairness on a case-by-case basis can enhance outcomes but often at the cost of predictability and increased expenses. Other options, like the Dutch WHOA, French safeguard, German StaRUG, and US Chapter 11, are assessed for their speed, risk of recognition, and execution dynamics.
Chapter 5 Fairness under the Dutch WHOA
From its start, the WHOA has incorporated a fairness framework into its statutes, making fairness a clear requirement for both plan design and court approval, rather than a discretionary addition. This mirrors the UK's direction post-Petrofac. Approval hinges not only on a "no worse off" baseline compared to the relevant alternative (which must be a form of insolvency) but also on whether the plan's benefits (the 'restructuring surplus') are equitably distributed among affected creditors in a cross-class cramdown.
Central to fairness in the WHOA are the principles that (i) each creditor has priority to their expected recovery in the relevant insolvency alternative, and (ii) any restructuring surplus is shared according to the absolute priority rule. Contractual or statutory subordination must be considered in allocating the restructuring surplus, e.g., no value can be allocated to shareholders unless all creditors receive full value. These principles set the baseline but can be deviated from. Any deviations must be explained, substantiated, and open to challenge, with the court assessing fairness in a cross-class cramdown. As in the UK, complexities arise when new money is involved. For smaller companies, it's been accepted that the new money provided by the existing shareholder driving a return was fair, even without extensive market testing. When the market is thoroughly tested through competitive solicitations, the outcome is more likely to be seen as fair, even if it results in high returns.
Ultimately, fairness in the WHOA is both procedural and substantive. Courts have refused to sanction plans due to insufficient transparency, lack of evidence, or information asymmetry. Recent UK cases highlight the same point—meaningful engagement, open records, and targeted expert input are now essential to proving fairness, not just procedural formalities.
In 2025, Dutch courts offered further guidance on how information undertakings can affect fairness. For instance, the court ruled that value recoverable by affected creditors in other group parts (not subject to restructuring) should be disclosed, as it shows the economic interest a creditor might have in the restructuring. In another case, the court noted that the chosen cut-off date for plan liabilities could lead to unfair outcomes: the date allowed a related party to receive a significant amount after the cut-off, which was used to finance new money investment as part of the restructuring. The court ruled that the cut-off date should have been substantiated, and the plan should have disclosed the impact of the chosen cut-off date on which liabilities were included or excluded from the plan.
Chapter 6 Building a resilient restructuring plan
Fairness should be driven by corporate leadership. To address and manage core operational challenges, management must:
Establish processes, enhance transparency, and bridge information gaps between agreeing and disagreeing creditors, creating a credible negotiation space.
Engage early with potential dissenters—not as a legal requirement, but as a testament to fairness. Show that any remaining opposition is unreasonable or that alternative proposals don't align with the plan's goals.
Provide full disclosure to aid decision-making: clear business and turnaround strategies, alternative analyses, liquidity forecasts, valuation methods, and a clear explanation of the restructuring surplus.
When new funding depends on approval, align terms with post-restructuring credit, supported by credible evidence or market testing.
Use a benefits report to clarify the sources and distribution of the plan surplus. Sharing potential gains can help balance fairness when juniors contribute to value creation.
Treat the plan like litigation: manage cases early, involve targeted experts, and maintain an open record of fair compromise instead of a last-minute closed-door deal.
Chapter 7 Our approach: fairness by design
Chapter 8 Looking ahead to 2026: a more selective restructuring plan market
The market will continue to be selective in its use of plans. We foresee ongoing use of "consensual LMEs," distressed sales, and pre-pack administration, with court processes reserved for resolving true deadlocks. But when a plan is the sole route to extract or preserve surplus—especially in complex, multi-creditor capital structures—plans will remain in use. Executing a plan in 2026 will benefit companies that integrate fairness into design, evidence, and process. For those who do, the UK remains an attractive venue.
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