As a challenging environment persists for UK businesses, we look ahead to what is shaping up to be a dynamic year for UK restructuring and insolvency.
Restructuring plans
The restructuring plan (RP) landscape has seen some significant shifts following last year's Thames Water, Petrofac and Waldorf cases. Courts are now taking a much harder look at fairness – particularly how out-of-the-money creditors are treated and whether restructuring benefits are being reasonably allocated. There's also a new Practice Statement requiring companies to demonstrate genuine efforts to engage with creditors before pursuing a plan. Whilst Waldorf's Supreme Court appeal has been withdrawn, we're likely to see more cases testing these boundaries.
Meanwhile, the German Regional Court's refusal to recognise Aggregate's English restructuring plan has thrown up challenges for cross-border recognition as practitioners eagerly await the outcome of an appeal of this decision. That said, RPs might be more attractive to US entities wanting to sidestep Chapter 11's absolute priority rule, as Fossil's recent successful restructuring demonstrated.
LMEs
Liability management exercises (LMEs) are making their way into Europe now, and with RPs becoming increasingly costly and uncertain – not to mention the growing challenge risk – we're expecting these to gain real traction as a go-to tool for distressed borrowers in 2026.
Digital assets
The Property (Digital Assets etc) Act 2025 is a game-changer. It's given insolvency practitioners statutory confirmation that digital assets are property, which means they can preserve and recover value with greater confidence. We'll be watching how the courts develop this new category (see this month's Alert for more details).
Payment and electronic money institutions
There's also anticipated reform for the payment and electronic money institutions special administration regime, following findings that the current special administration regime isn't quite hitting the mark (see this month's Alert for more details).
Upcoming appeals
Finally, the judgment of the Court of Appeal in Noal SCSp v Novalpina, in relation to the strict 12-month payment test for MVLs, will clarify whether this restrictive interpretation stands. The judgment of the Supreme Court is also expected in relation to the decision in Servis-Terminal LLC v Drelle which held that an unrecognised foreign judgment cannot form the basis for a bankruptcy petition in England.
Find out more
To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.
