The Adler Restructuring Plan Judgment: Is Pari Passu Passé?

What Happened

On 21 April 2023, Mr Justice Leech gave his written reasons for sanctioning the Adler Group's novel and ground-breaking English restructuring plan¹ following a fully contested hearing and cross-examination of witnesses. It is the most significant decision involving a restructuring plan since Virgin Active² and was opposed by an ad hoc group of holders of 2029 Notes (the "AHG"). In a lengthy judgment, the Court provided vital insight into its approach to use of its cross-class cram-down power and the circumstances in which a plan can afford differential treatment to otherwise pari passu creditors.

Key Takeaways

The key takeaways from the judgment are:

1. The plan did not violate the pari passu principle despite providing for differential treatment to otherwise pari passu creditors. One of the AHG's arguments was that the plan – which they termed a "liquidation plan" – infringed the pari passu principle because it maintained the time