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ARTICLE · 31 OCTOBER 2022

Restructuring Plans And Their Impact On Third Party Guarantees

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A recent decision of the High Court has given helpful clarity on the effects of the UK's restructuring plan procedure on lease agreements and the implications for lease guarantors.

United KingdomInsolvency/Bankruptcy/Re-Structuring
Devi Shah
Devi Shah
Ben Ward
Ben Ward
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Oceanfill Ltd v Nuffield Health Wellbeing Ltd and Cannons Group Ltd. [2022] EWHC 2178 (Ch)

A recent decision of the High Court has given helpful clarity on the effects of the UK's restructuring plan procedure on lease agreements and the implications for lease guarantors.

The Virgin Active plan

The case arose from Virgin Active's restructuring plan which was sanctioned in May 2021 (covered here). The restructuring plan procedure was introduced in the UK by the Corporate Insolvency and Governance Act 2020 in the midst of the Covid-19 pandemic (covered here), and is now provided for in Part 26A of the Companies Act 2006. For the first time the Court could sanction a plan for companies in financial difficulties which had been rejected by a class of its creditors (so-called cross class cram-down) if an "in-the-money" class had voted in favour.

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