Restructuring plans are an increasingly popular tool that offer companies and creditors a formal arrangement to push forward through financial difficulty – but with some key advantages.

A restructuring plan is a modified scheme of arrangement whose value is filtering down from large, international companies to the mid-market. Benefits include:

  • a cross-class cram down – that can compromise certain creditors if they don’t approve the plan
  • directors can retain control of the company
  • it can make a company a more viable proposition to attract new funding from investors.

Our experienced advisers can support you every step of the way to deliver the best solution for your company.

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  • Market-leading experience
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    Providing restructuring, insolvency, valuation and financial modelling expertise, as well as experience of giving evidence in court.
  • Demonstrable track record
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    Highly experienced in advising directors, shareholders, lenders and other intermediaries about restructuring plans.
  • International strength
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    We have restructuring and insolvency experts in over 135 countries, with fast access to local expertise when you need it.
Kevin Coates
Get in touch
Kevin Coates
Partner, Head of Restructuring and Debt Advisory
Contact Kevin Coates Learn more about Kevin Coates
Kevin Coates
Contact Kevin Coates Learn more about Kevin Coates
Kevin Coates
Partner, Head of Restructuring and Debt Advisory
Kevin Coates
(0)20 7865 2756

Why Grant Thornton?

Our people are there to support you every step of the way, bringing extensive technical expertise in formal restructuring and insolvency situations, as well as experience in your sector or jurisdiction.

We work collaboratively and pragmatically to access all the necessary information, experience and potential reactions of various stakeholders.

With the potential for creditors to challenge restructuring plans, we can also submit witness statements and be subject to cross-examination in court.

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Advising Smile Telecoms through a restructuring plan process

The challenge
A disparate group of senior lenders were struggling to agree the terms on which fresh capital could be injected when Smile Telecoms found itself in financial difficulty.
The solution
We advised on a restructuring plan that was the first to ‘cram out’ dissenting creditors – who were not able to vote as they were deemed to have no genuine economic interest.
The results
The majority shareholder was able to provide new money and gained 100% equity control. Valuation evidence was key and showed what is possible with restructuring plans.

Helping Virgin Active overcome its restructuring challenges

The challenge
Pandemic-hit gym operator Virgin Active had senior debt of around £200 million, various lease obligations and a restructuring plan under challenge from a group of landlords.
The solution
We successfully advised on a restructuring plan that included a cross-class cram-down to bind dissenting creditors to the new arrangements, allowing the gym chain to move forward.
The results
The company was able to amend senior debt facility terms, exit or amend lease agreement terms and let shareholders insert new money on a pari-passu basis with existing senior debt.

Quick guide to Part 26A Restructuring Plan:

The restructuring plan, introduced in June 2020 under Part 26A of the Companies Act 2006, is for companies encountering or likely to encounter financial difficulties.

It can be used to compromise the rights of secured creditors, unsecured creditors and shareholders provided changes are deemed fair (note: can amend even if in the money, if you have 75% vote in favour).

It can be used across classes of creditors and members, as well as within classes (as with a scheme of arrangement).

Voting within classes: 75% by value; no numerosity requirement.

Voting by classes: only one class needs to approve the plan (approving class must have a genuine economic interest in the company).

Classes excluded from voting: every class affected by the plan has to participate unless that class has no genuine economic interest.

Within class cram-down: yes.

Cross-class cram-down: yes, if:

  • classes who vote against the plan and are to be crammed down are no worse off than in the ‘relevant alternative’ (most likely to occur if the plan is not sanctioned)
  • the plan is agreed by a class who would receive a payment, or would have a genuine economic interest in the company, in the event of the relevant alternative

Non-financial creditors: can be considered a class and part of the plan; no numerosity requirement.

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Understanding what makes a restructuring plan acceptable to HMRC may make court approval more likely.

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The Restructuring Plan is proving increasingly popular. But what issues might arise for financial services?

    Get in touch with our experts

    Andy Charters
    Andy Charters
    Partner
    London
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    Kevin Coates
    Kevin Coates
    Partner, Head of Restructuring and Debt...
    London
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    Daniel Smith
    Daniel Smith
    Partner, Head of Private Healthcare
    London
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