25 January 2024
In a much-awaited decision the Court of Appeal has upheld an appeal by bondholders against a restructuring plan pursuant to Part 26A of the Companies Act 2006. This is the first time the Court of Appeal has considered a restructuring plan.
The Court of Appeal held that the plan departed in a material respect and without justification from the equal treatment that unsecured creditors would have received in an insolvency, which in this case would have been the relevant alternative to the plan. Furthermore, the Court of Appeal held that the first instance judge had applied the wrong approach to the exercise of his discretion to 'cram down' a dissenting class of noteholders.