Restructuring Plans – Do's And Don'ts

Restructuring plans under Part 26A of the Companies Act 2006 are a powerful tool for restructuring the debts of a company.

They can be used to implement a range of new arrangements including amendments and extensions of debt terms, compromises of debt, injections of new funding and debt for equity swaps. Notably, restructuring plans can overcome significant opposition to a restructuring from creditors as the court has the power to sanction (i.e. approve) a restructuring plan even where an entire class of creditors or shareholders has voted against the restructuring plan (a so-called "cross-class cram down").

However, restructuring plans are not without their complexities. Fortunately, there is a growing body of precedent on the use of restructuring plans since their introduction in 2020. We have therefore set out five do's and five don’ts for companies looking to utilise a restructuring plan.