Mr Justice Adam Johnson has today handed down judgment in an application to sanction a restructuring plan proposed under Part 26A of the Companies Act 2006 by The Great Annual Savings Company Ltd.  The judgment addresses a number of issues surrounding Restructuring Plans and is an important decision when considering the possible use of Restructuring Plans by SMEs, in particular where a cram-down of HMRC is sought.

Whilst the Judge refused to sanction the Plan, on the grounds that (1) he was not persuaded that HMRC would be no worse off under the Plan than in the relevant alternative; and (2) that the Plan did not, in his view, result in a fair distribution of the restructuring surplus; the Judge did find in favour of the Company and against HMRC and the three other opposing creditors on a number of key issues including the consideration of potential antecedent transactions and other possible claims when considering the “no worse off test”; a challenge to the identity,  scope and treatment  of critical creditors within the Plan; the suggestion that a moratorium on enforcement was unfair or a blot on the Plan; the suggestion that a creditor’s possible future trading with third parties should the Plan not be sanctioned was a relevant consideration in the “no worse off test”; and that the views of “out of the money” creditors carry little, if any, weight when assessing the fairness of a Restructuring Plan.

The Judge also approved the view expressed previously, in particular by Zacaroli J in Re Houst Ltd [2022] EWHC 1941 (Ch), that there was nothing inherently objectionable in a Restructuring Plan proposing a different order of priorities than would apply in the relevant alternative; and applied his previous decision in Re Listrac Midco [2023] EWHC 460 (Ch) in concluding that even a class meeting where no votes are cast and no creditors appear does not prevent s.901G CA 2006 from being engaged.

Matthew Weaver KC, instructed by Shoosmiths LLP, appeared for the Company.

Read the full judgment, here.