A restructuring plan is a modified scheme of arrangement whose value is filtering down from large, international companies to the mid-market. Benefits include:
Our experienced advisers can support you every step of the way to deliver the best solution for your company.
Our people are there to support you every step of the way, bringing extensive technical expertise in formal restructuring and insolvency situations, as well as experience in your sector or jurisdiction.
We work collaboratively and pragmatically to access all the necessary information, experience and potential reactions of various stakeholders.
With the potential for creditors to challenge restructuring plans, we can also submit witness statements and be subject to cross-examination in court.
The restructuring plan, introduced in June 2020 under Part 26A of the Companies Act 2006, is for companies encountering or likely to encounter financial difficulties.
It can be used to compromise the rights of secured creditors, unsecured creditors and shareholders provided changes are deemed fair (note: can amend even if in the money, if you have 75% vote in favour).
It can be used across classes of creditors and members, as well as within classes (as with a scheme of arrangement).
Voting within classes: 75% by value; no numerosity requirement.
Voting by classes: only one class needs to approve the plan (approving class must have a genuine economic interest in the company).
Classes excluded from voting: every class affected by the plan has to participate unless that class has no genuine economic interest.
Within class cram-down: yes.
Cross-class cram-down: yes, if:
Non-financial creditors: can be considered a class and part of the plan; no numerosity requirement.
Understanding what makes a restructuring plan acceptable to HMRC may make court approval more likely.
The Restructuring Plan is proving increasingly popular. But what issues might arise for financial services?
