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ARTICLE · 18 AUGUST 2023

Tips For Dissenting Stakeholders Challenging A Cram Down (or Up)

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This article considers the key issues a dissenting creditor or shareholder (Dissenting Stakeholder) should consider when challenging a UK Restructuring Plan (Plan)...

United KingdomInsolvency/Bankruptcy/Re-Structuring
Katten Muchin Rosenman LLP
Katten Muchin Rosenman LLP
Sonya Van de Graaff
Sonya Van de Graaff
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Background

This article considers the key issues a dissenting creditor or shareholder (Dissenting Stakeholder) should consider when challenging a UK Restructuring Plan (Plan) under Part 26A of the Companies Act 2006. For convenience, the article assumes that the proponent of the Plan is the debtor company (Company), and that the Dissenting Stakeholder is a member of the class of creditors (Dissenting Class) that voted against the Plan and is therefore at risk of having the Plan imposed on them by way of a so-called "cross-class cram down" (cram down).

Since coming into law in June 2020, only 20 companies have applied to restructure their balance sheet pursuant to a Plan. Dissenting Stakeholders have not fared well so far. Notwithstanding that only six of the 20 Plans have resorted to cram down, Dissenting Stakeholders have succeeded in only three of the six cases.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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