Restructuring Plan

A Precision Tool for Complex Debt Restructuring

For most businesses facing financial difficulty, a CVA or administration provides an adequate rescue framework. But for companies with complex capital structures — multiple creditor classes, secured lenders who will not engage informally, or a single dissenting group holding a viable recovery to ransom — a more powerful instrument is sometimes required.

The Part 26A Restructuring Plan, introduced under the Corporate Insolvency and Governance Act 2020, is that instrument. It is a court-sanctioned procedure that allows a company to impose a restructuring on dissenting creditor classes — provided the court is satisfied the plan is fair and produces a better outcome than the alternative. In the right situation, it can resolve in weeks a deadlock that informal negotiation has failed to break in months.

This is not a procedure for every company. It is expensive, technically demanding, and court-driven. But where the debt complexity justifies it, it is one of the most powerful restructuring tools available under English law.

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Overcoming Creditor Gridlock

The fundamental problem a Restructuring Plan solves is one that other procedures cannot: a single class of creditors blocking a rescue that is in the best interests of the company and the majority of its stakeholders.

Under a CVA, creditors representing 25% by value can defeat a proposal — even where the overwhelming majority support it. A Restructuring Plan changes that arithmetic. Where the plan is fair and the court is satisfied that dissenting creditors are no better off in the relevant alternative — typically liquidation — it can sanction the plan over the objections of those creditors entirely.

This power, known as cross-class cram down, is what distinguishes the Restructuring Plan from every other rescue procedure available in English law. It is the mechanism that turns a theoretical recovery into an enforceable one.

Overcoming Creditor Gridlock

What is a Part 26A Restructuring Plan?

A Restructuring Plan is a court-sanctioned agreement between a company and its creditors — or its members — to restructure the company’s liabilities so it can continue to operate as a going concern.

Unlike a CVA, which is limited to unsecured creditors, a Restructuring Plan can involve both secured and unsecured creditors. It can restructure bank debt, landlord obligations, and bond arrangements that a CVA cannot touch. It can also involve shareholders where equity dilution or conversion is part of the restructuring.

To qualify, the company must be facing, or be likely to face, financial difficulties that affect its ability to carry on business as a going concern. The plan must be designed to eliminate, reduce, or mitigate those difficulties.

The Cross-Class Cram Down

For a creditor class to approve the plan, 75% in value of those who vote must vote in favour. Where at least one class — but not all classes — approves the plan, the court can use its discretion to impose the plan on dissenting classes at the sanction hearing.

To exercise that discretion, the court must be satisfied on two points. First, that none of the members of the dissenting class are any worse off under the plan than they would be in the relevant alternative — most commonly, liquidation. Second, that the plan has been approved by at least one class of creditors or members who would receive a payment or have a genuine economic interest in the company in that relevant alternative.

This is not a mechanism for forcing an unfair outcome on creditors. It is a mechanism for preventing a minority from extracting disproportionate value by blocking a recovery that would benefit the company and the majority of those owed money by it.

Considering a Restructuring Plan or weighing it against other options? We can assess your creditor profile and give you a direct view on which procedure is appropriate.

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The Cross-Class Cram Down

Expert Advice from a Nationally Recognised Practitioner

The Insolvency Practitioners is an independent national firm led by Michael Chamberlain – a specialist in complex restructuring with over 30 years of practice and Big 4 pedigree. Restructuring Plans require a high level of technical expertise, court experience, and commercial awareness. Michael brings all three.

Every director or adviser who contacts us speaks to Michael directly – not a junior, not a call handler. On a procedure of this complexity, that matters.

“A Restructuring Plan is not a one-size-fits-all product. It is a precision tool for complex situations. Our role is to help you determine whether the benefits — such as binding secured creditors through cross-class cram down — outweigh the court costs, or whether a more streamlined route like a CVA or moratorium is more appropriate for your scale.”

How the Process Works

A Restructuring Plan is a court-driven process with defined procedural stages.

  1. Preparation. We work with you and your legal advisers to draft a plan that demonstrates how the company will be rescued, how each creditor class is treated, and why the proposal is fair relative to the relevant alternative.
  2. Convening hearing. The court is asked to approve the classification of creditors and members who will vote on the plan and to convene the meetings.
  3. The vote. Creditor and member meetings are held. For a class to approve the plan, 75% in value of those voting must support it.

Sanction hearing. The court reviews the results. If the cross-class cram down conditions are met — at least one approving class, no dissenting class worse off than in the alternative — the court can sanction the plan over any objections and it becomes binding on all creditors.

Ready to Discuss Whether This Is the Right Route?

Complex financial challenges require early, expert assessment. The sooner we understand your creditor profile and capital structure, the clearer the picture of which procedure — Restructuring Plan, CVA, moratorium, or administration — gives you the best available outcome.

Speak to Michael Chamberlain – book a confidential call or video meeting

Not sure whether a Restructuring Plan or a CVA is the more appropriate tool? Our CVA page and Rescue My Company overview set out both procedures and the circumstances in which each applies.

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Complex financial challenges require early, expert intervention. Request a confidential call or video meeting with Michael to discuss your company’s situation.

Your enquiry is strictly confidential. We offer a pragmatic, straight-talking assessment of whether a Restructuring Plan is the right path for your business.

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What happens next? Mike will review your enquiry personally. We will arrange a conversation to look at your creditor profile and determine the most viable route forward.

FAQ's

How does a Restructuring Plan differ from a CVA?

A CVA can only bind unsecured creditors and can be defeated by 25% of voting creditors by value. A Restructuring Plan can involve both secured and unsecured creditors, and can be imposed on dissenting classes through cross-class cram down if the court is satisfied the conditions are met. It is a more powerful tool, but also more expensive and procedurally demanding.

What is the 75% rule in a Restructuring Plan?

For a class of creditors to be treated as having approved the plan, at least 75% in value of those who vote must vote in favour. Unlike a scheme of arrangement, there is no requirement for a majority by number — only by value.

What is the "relevant alternative"?

The relevant alternative is what would happen to the company if the Restructuring Plan were not sanctioned — typically liquidation. At the sanction hearing, the court must be satisfied that no member of a dissenting class is any worse off under the plan than they would be in that alternative. This is the legal test for cross-class cram down.

Is a Restructuring Plan expensive?

Yes — it involves two court hearings, significant legal input, and detailed financial modelling of the relevant alternative. It is generally most appropriate for mid-market or larger companies with complex debt structures where the cross-class cram down is essential to the rescue. For smaller businesses, a CVA or moratorium is likely to be more cost-effective.

Can small businesses use a Restructuring Plan?

While the procedure is technically available to all companies, its cost makes it prohibitive for most smaller businesses. There is a separate Small Business Restructuring process designed specifically for smaller companies with simpler debt profiles. We can advise quickly on which procedure is most appropriate for your size and situation.

Is my company eligible?

To qualify, your company must be facing, or be likely to face, financial difficulties that affect its ability to carry on as a going concern. The plan must be designed to eliminate, reduce, or mitigate those difficulties. There is no minimum size requirement, but the cost structure means it is rarely proportionate below a certain scale of debt complexity.

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