Restructuring Plan

Part 26A of the Companies Act 2006 applies where a company has encountered, or is likely to encounter, financial difficulties that are affecting, or will or may affect, its ability to carry on business as a going concern, and a compromise or arrangement is proposed with its creditors or members with the purpose of addressing those difficulties. If a number representing 75% in value of the creditors or class of creditors or members or class of members, present and voting at the meeting, agree the compromise or arrangement, the court may sanction it under section 901F.

The plan's most distinctive feature is the cross-class cram-down mechanism in section 901G: even where one or more classes of creditor or member vote against the plan, the court may still sanction it if none of the members of the dissenting class would be worse off than under the most likely alternative outcome, and the plan has been approved by a class with a genuine economic interest in that alternative. As the legislation puts it, the fact that the dissenting class has not agreed the compromise or arrangement does not prevent the court from sanctioning it under section 901F, provided the statutory conditions are satisfied.