Why options analysis is more important than ever

We are currently seeing something of a recalibration in the restructuring plan (RP) market. Evolving case law, greater evidentiary requirements and concerns about rising costs have created uncertainty.

Against this backdrop, the court’s revised practice statement for schemes of arrangement and restructuring plans, effective 1 January 2026, seeks to enhance fairness, transparency and predictability in the restructuring plan process.

Its central message is clear: companies must demonstrate genuine stakeholder engagement, demonstrate fairness in the proposed deal and thorough consideration of alternative options before coming to court.

Rethinking the restructuring toolkit

These developments are prompting both companies and creditors to consider whether other restructuring tools – such as inter-creditor drags, share pledge enforcements, pre-pack administrations, CVAs or receiverships (over shares or property) - might be more effective in certain situations.

Developments in the lending market that have seen the proliferation of borrower and sponsor friendly debt documents also enable companies and sponsors to consider liability management exercises (LMEs). LMEs gained momentum in 2025 in Europe, having been used frequently in the US for a number of years, as a faster, out‑of‑court alternative to the RP and other in-court restructuring processes across Europe.

Why a full options analysis is more important than ever

These developments only reinforce the need for a comprehensive options review in every restructuring situation. A detailed and thoughtful options analysis carried out early in the process can:

• Build transparency and surface issues before they become roadblocks
• Foster consensus across different stakeholder groups
• Provide fall back options and help frame the approach needed towards different creditors groups
• Strengthen engagement with all stakeholder groups - including out‑of‑the‑money creditors
• Assist in presenting evidence of fairness in any future court process.

Options analysis can be viewed as a form of contingency planning, with the close collaboration of both financial and legal advisors.

Any options analysis needs to be able to react to the deal dynamics as negotiations with stakeholders take place. It is possible that the implementation tool of choice will shift with changing dynamics and sentiments amongst stakeholder groups.

What should an options analysis consider?

Any options analysis will be fact and situation specific. However, there are certain factors that always need to be considered:

Group and security structure - to identify a point of entry (or multiple points of entry) for an enforcement.

Liquidity runway - this is going to drive the timetable and may rule out some of the more formal options. It needs to be consistently reviewed and challenged to ensure actual trading is not deviating too far from projections. Early identification of any liquidity needs before a restructuring can be implemented will also inform any requests to lenders for interim financing.

Jurisdiction - Practitioners now have more choice as regards formal in-court restructuring options across Europe and the UK. The RP, the Dutch WHOA, and the Spanish Restructuring Plan have been successfully used and deployed for business of varying sizes and complexity.

A critical component of options work is assessing the legal frameworks available given the jurisdictions involved. It may be possible to access more favourable tools or jurisdictions, for example via COMI shifts, governing law changes or other practical steps.

It is also important to consider the jurisdictions where the procedure needs to be recognised. 

Value break - Where does value break on a going concern, break-up or liquidation basis? Consideration needs to be given to the relevant tests that will be applied to different formal procedures in different jurisdictions. For example, the Dutch WHOA has the concept of a post reorganisation valuation combined with a liquidation outcome test. This contrasts with the RP which is focused more on the relevant alternative and the allocation of post restructuring surplus.

Creditor attitudes and support levels - This needs to consider possible class composition and support thresholds. This needs to be worked through so that an appropriate commercial scheme can be developed and explained to stakeholders, and importantly, defended in the face of any challenges or litigation that might arise.

Tax implications - This can be a complex issue and is very jurisdiction and deal specific. Proper planning and analysis is needed before deciding on an implementation route.

Conclusion

The RP is undoubtedly going through a period of adjustment. Perhaps this is not surprising as we have only had five years of case law compared with roughly 40 years for pre‑pack administrations and more than 150 years for schemes of arrangement. Despite this, the RP continues to stand out as a uniquely flexible and powerful restructuring tool, offering capabilities that many alternatives cannot match.

However, it will always be one of many options borrowers and their stakeholders need to consider in an evolving global restructuring environment.

For more information, contact Andy Charters.