In Re A Company [2026] EWHC 2051 (Ch), the High Court exercised cross-class cram down to sanction a restructuring plan following the earlier convening hearing (Re Iguanas Holdings Ltd [2026] EWHC 1229 (Ch)). Only the secured creditor class had voted in favour of the plan by a statutory majority, one class of landlords had voted against and the other classes were deemed to have dissented due to no meeting attendees or the only meeting attendee being the chair holding proxies (see Creditor schemes of arrangement, Q&A here).
Meade J accepted that Conditions A and B under s 901G(3) and (5) CA 2006 were satisfied, providing jurisdiction to exercise cross-class cram down:
The judge held that it was also fair to exercise cross-class cram down. He noted that there was no formula to decide what was a fair treatment of 'out of the money' classes of unsecured creditors in this context, albeit that Re Petrofac Ltd [2025] EWHC 1250 (Ch) and Re Waldorf Production UK plc [2025] EWHC 2181 (Ch) (see FC Case Feature 12 May 2026) (in which the courts refused to sanction the relevant restructuring plans) had fundamentally changed the former view that such creditors could be ignored (ie excluded from any return under a restructuring plan).
On the facts, dissenting classes had still obtained 200% of their expected return in the relevant alternative. Furthermore, the allocation of plan benefits to the secured creditor (including its retention of indirect equity in the plan company) was justified by its release of the secured debt obligations, its injection of new money, its retention of equity in the relevant alternative, a nil value for that equity post-restructuring and profit sharing arrangements. In summary, the secured creditor would provide almost 99% of the plan benefits but would receive 13.4% of those benefits.
The class of landlords that had actively dissented (having their rent reduced to zero) were treated fairly as they would retain a rolling break right and would also receive a dividend of 200% of the expected return in the relevant alternative.
Meade J's brief judgment following an unopposed hearing also suggests that the fact that the relevant alternative was a pre-pack in which the dissenting creditors would not have a 'holdout' position meant that the plan could be distinguished from those in Petrofac and Waldorf in which sanction was refused. However, the decision did not need to rely on any such distinction, which was not fully reasoned.
First published on the R&I News Service on 21 August 2026
To view our previous blogs, please visit our blog home page.
Want to view more content like this? Or view our previous features? Sign up for a free trial of our service.