The UK’s Part 26A restructuring plan provides a fast and flexible mechanism for restructuring the indebtedness of companies experiencing financial distress. Importantly, the UK restructuring plan is not confined to UK-incorporated companies or UK-based corporate groups. It has often been used for companies and situations where there was (and is) no obvious connection to the UK, making it a potential viable strategic alternative for U.S. and international groups and companies evaluating restructuring alternatives.
UK Restructuring Plan Advantages over U.S. Chapter 11
For U.S.-based groups and companies, the UK restructuring plan offers several compelling advantages as an alternative to U.S. Chapter 11.
Ability to focus on specific parts of the capital structure
The UK restructuring plan can be used to address very specific layers of the capital structure without involving other creditors or stakeholders. It does not involve the debtor filing for ‘bankruptcy’, and can therefore allow a more surgical approach with limited adverse publicity.
Preservation of Nasdaq listing
A Nasdaq‑listed company may be better able to preserve its listing during a UK restructuring plan process. Nasdaq has not treated UK restructuring plans as a bankruptcy process, for example Argo Blockchain.
Shareholders can retain equity
Under Chapter 11, equity cannot normally receive value unless all creditors are paid in full (or consent), reflecting the strict absolute priority rule. By contrast, the UK court may approve a plan in which distributions depart from strict priority, provided that the plan is fair. Whilst Chapter 11 has a strict test with some exceptions (new money, for example), UK restructuring plans apply a broader fairness test, allowing more flexible allocations of value (for example, enabling existing shareholders to retain some equity in appropriate cases).
No numerosity requirement
There is no numerosity requirement for voting to approve the UK restructuring plan, which often makes achieving class approval easier (for example when there are retail bondholders) than under a Chapter 11 plan.
Speed and efficiency
UK restructuring plans are typically prepared and confirmed within eight to ten weeks from start to finish. This compressed timeline helps to preserve business value and minimise professional fees, which is particularly attractive to sponsors and lenders, compared with a full U.S. Chapter 11 case. However, a fairer comparison may be between a pre‑packaged or pre‑arranged Chapter 11 plan, which can, in some cases, achieve a similar timetable.
Less court involvement
As with most Chapter 11 proceedings, management remains in control of the business, but most UK restructuring plans only require two court hearings. During the UK process, the debtor continues to run its business as normal and does not require court approval to dispose of assets, for example.
Less publicity
There is no public docket equivalent (although the court is open to the public and to journalists, and certain key documents will become public). The process generally involves less public disclosure, with the explanatory statement often being limited to plan creditors.
Releases of guarantors
In Chapter 11, the instinct is to file proceedings for each of the guarantors and the borrowers in a group structure to avoid lenders circumventing the automatic stay by pursuing co-obligors. This is not usually necessary for a UK restructuring plan because it is framed as a compromise or arrangement between a company and its creditors, and English courts take a broad, pragmatic view of ancillary third-party releases when they are part of making the restructuring work. In the UK, it is often sufficient that one company proposes a restructuring plan, and the UK court’s jurisdiction extends to releasing borrowers and guarantors when those rights are ancillary to the plan and help make it effective, including to prevent subrogation or ‘ricochet’ claims bouncing back against the plan company after the primary debt has been compromised.
U.S. courts have granted Chapter 15 recognition to non-consensual third-party releases approved as part of a UK restructuring plan, even when these releases would not have been available under Chapter 11.
U.S. Chapter 11 Advantages over the UK Restructuring Plan
Chapter 11 may offer several advantages that are not available under the UK restructuring plan.
Automatic stay and comprehensive protection
The commencement of a Chapter 11 filing imposes an automatic stay on creditor actions, providing immediate breathing space and preventing enforcement against property of the Chapter 11 debtors without the need for a separate court application.
By contrast, there is no automatic stay under the UK restructuring plan. In practice, debtors engage early with creditors before enforceable defaults have arisen, and creditors often enter into lock-up or support agreements with the plan company. Intercreditor agreements may restrict junior-ranking creditors from taking action during pre-agreed standstill periods. It is also possible that ad hoc stays could be obtained to prevent minority creditors from circumventing a UK restructuring plan that is supported by a majority but not yet in force.
Debtor-in-possession financing framework
Chapter 11 provides a well-developed statutory regime for debtor-in-possession financing, including the ability to grant super-priority liens. This can be critical when the company needs new liquidity to stabilise operations during the restructuring.
Under the UK system, a debtor group must find a way of fitting the required funding within the existing finance documents, for example using liability management exercise methods, or attempt a separate UK restructuring plan or scheme of arrangement to first implement the funding structure before embarking on a second UK restructuring plan to make deeper modifications to its capital structure. The existing loan documents can be amended as part of the UK restructuring plan if the requisite majority of an in-the-money class votes in favour and certain conditions are satisfied so long as the UK restructuring plan will not impose any obligations on existing lenders to provide new money.
Stricter priority protection for creditors
From the point of view of creditors, the application of the absolute priority rule means that creditors’ ranking is respected unless they consent to different treatment (or are primed with debtor-in-possession (DIP) finance, in which case they must have adequate protection). This offers greater predictability and protection against value being redistributed to equity or other junior stakeholders without creditor support.
How the UK Restructuring Plan Works
Eligibility and jurisdiction
A Part 26A restructuring plan is available to companies registered in, or with a ‘sufficient connection’ to, the UK, provided they have encountered, or are likely to encounter, financial difficulties affecting their ability to continue as a going concern. A sufficient connection is a fluid concept that includes (1) UK incorporation; (2) a debt instrument governed by English law; or (3) an overseas company having or changing its centre of main interests to the UK. Notably, some companies have changed the governing law of their debt documents to English law to create a sufficient connection (which can often be done with a lower voting threshold, e.g. 50+%) and take advantage of a UK restructuring plan. Another technique is to create a UK entity that will become a co-borrower or guarantor to the existing non-UK borrowers and guarantors, specifically to access this regime.
Class voting and court hearings
All affected creditors (and shareholders, if their rights are altered) are divided into classes of persons having similar rights. At least 75% by value of those voting in at least one in-the-money class must approve. There is no numerosity requirement. The restructuring plan involves two court hearings: a convening hearing, where the court approves class composition, and a sanction hearing (similar to a U.S. Chapter 11 plan confirmation hearing), where the court approves the plan terms after voting. If all classes approve, the court will generally confirm the plan unless there is some issue with process or fairness.
Cross-class cram down
If one or more classes vote against the plan, the court may still exercise its discretion to confirm it (and ‘cram’ the plan on other creditors), provided two statutory conditions are met (under s.901G of the UK Companies Act 2006):
- Condition A – ‘No Worse Off’ Test. The crammed-down classes of creditors must not be worse off under the plan than they would be in the most likely alternative scenario (often, but not necessarily, a hypothetical liquidation). This requires expert evidence from valuation experts and a liquidation analysis by insolvency practitioners (this is in contrast to plan confirmation under Chapter 11, where cram down requires, among other things, adherence to the absolute priority rule and creditors doing at least as well as they would in a liquidation).
- Condition B – Genuine Economic Interest. At least one class of creditors with a genuine economic interest in the company (i.e. who would receive value in the relevant alternative) has approved the plan by the 75% threshold. A wholly out-of-the-money class cannot therefore impose a plan on other classes.
If both conditions are satisfied, the UK court then uses its discretion to assess overall fairness before approving the cross-class cram down. The court scrutinises class composition, valuation evidence, and the allocation of ‘restructuring benefits’ among classes to ensure the plan is fair in the circumstances. English judges have emphasised that cross-class cram down is not a tool to sideline entire classes without negotiation; rather, it is meant to counter unreasonable holdouts once a fair deal has been reached with those willing to support it. As long as the plan treats stakeholders fairly and the statutory conditions are met, the judge can confirm it even over dissent. Once approved, the plan becomes binding on all affected creditors or members.
UK Restructuring Plan vs. U.S. Chapter 11: Key Differences
While the UK restructuring plan and U.S. Chapter 11 share the broad objective of facilitating reorganisation via creditor agreements, they differ in important ways. The table below highlights select features and relative advantages of the UK plan in a cross-border context:
| UK Restructuring Plan (Part 26A) | U.S. Chapter 11 Proceeding | |
|---|---|---|
| Process & Timeline | Streamlined, often 8–10 weeks from first court hearing to approval. Not a bankruptcy/insolvency proceeding under English law, the company remains in ‘business as usual’ mode during the restructuring process. | A pre‑packaged or pre‑arranged Chapter 11 plan can achieve a comparable timetable to the UK restructuring plan timetable. A traditional (free fall) Chapter 11 case could take years to complete. |
| Automatic Stay | No | Yes |
| DIP |
No Cannot be used when the company has completely run out of money (action must be taken early). |
Yes Chapter 11 process can be commenced without funding in place (but there is a risk of dismissal without procured financing). |
| Debtor Control | Debtor’s management stays in control throughout. No administrator or trustee is appointed (no formal debtor-in-possession). | Debtor remains debtor-in-possession, but under ongoing court oversight (regular reporting, judge approval of major transactions and fees) and subject to the involvement of official committees and a U.S. trustee; the court’s oversight and role of the trustee and official committees falls away upon closing of a bankruptcy case or dismissal. Note that there is always a risk of a party in interest (including the trustee) seeking the appointment of a Chapter 11 trustee or conversion to Chapter 7 (where a debtor ceases to be in control of its case). |
| Court Involvement | Typically court involvement is limited to two hearings to approve the plan. | Extensive court involvement; court approvals are required for all actions outside the ordinary course of business, as well as to approve professional fees (and retentions), financings, and use of existing cash management systems (among other things). |
| Voting & Cram Down | Flexible class voting: 75% by debt value in each class (no ‘majority in number’ needed). Cross-class cram down possible if the plan meets the no-worse-off test and at least one class with a genuine economic interest has approved it. Absolute priority rule does not strictly apply, and fairness is judged case by case, considering contributions to value generated by the plan. | Class approval by > 50% in number and 2/3 in amount of claims per class; cram down of a rejecting class allowed if the plan is ‘fair and equitable’ (requires absolute priority rule compliance unless senior creditors consent), satisfies best interests tests, and doesn’t discriminate unfairly. |
| Scope & Flexibility |
Primarily used for balance-sheet restructuring or cases where leases need to be restructured (for example retail or hospitality sites). Can also be used for a range of other situations, including operational restructuring, subject to the constraints of no DIP financing and no automatic stay. Could potentially be combined with other UK proceedings, for example administration, in order to obtain a general stay. |
The traditional Chapter 11 process, and the Bankruptcy Code generally, provides mechanics for a comprehensive operational and balance sheet restructuring – but this process is often lengthy and expensive. A more expedited ‘pre-pack’ or ‘pre-arranged’ Chapter 11 is primarily used for balance sheet restructurings only (where the impacted creditors are easily identifiable) before a formal ‘bar date’ process. |
| Cost & Confidentiality | Generally lower cost for targeted debt deals: fewer procedural steps and no official committees. Proceedings and court filings usually public, though typically no U.S.-style extensive discovery or depositions. | High costs for complex cases (due to length, multi-party litigation, creditor committees). Court dockets are public, and there are restructuring-focused media outlets that cover major cases. |
Case Highlights: Key Decisions Illustrating the UK Plan’s Success
Syncreon (2019) – U.S. group which used a UK scheme of arrangement
Syncreon Group, a Michigan-based global logistics company, became a trailblazer by using the English courts to restructure approximately $1.1 billion of debt rather than resort to U.S. Chapter 11. Before the advent of the Part 26A plan, Syncreon implemented English schemes of arrangement, the UK plan’s legal predecessor. The governing law of the relevant debt was changed from New York law to English law, proving a sufficient connection to the UK. Once debt was amended to English law, the ‘Rule in Gibbs’ provides that only English courts may compromise debts governed by English law.
McDermott International (2024) – Global parallel proceedings
The McDermott International restructuring in 2023–24 showcased the UK plan’s ability to handle major dissent and coordinate across borders. McDermott, a Houston-based energy engineering group with UK and Dutch subsidiaries, pursued a parallel UK restructuring plan and Dutch WHOA proceedings after an initial 2020 Chapter 11 reorganisation proved insufficient. The equity holders did not inject any new money and nevertheless retained their rights while a more senior class (certain unsecured creditors) was crammed down. McDermott is an international group made up of hundreds of entities. To use a UK process, it selected CB&I UK Limited, an English-registered subsidiary. The group structured the plan so that CB&I UK Limited would act as the primary ‘plan company’. By routing the core restructuring through the English entity, McDermott avoided the need to move the main U.S. parent company’s headquarters to the UK.
Fossil Group (2025) – Significant New York–law bonds restructuring via a UK plan
Fossil Group Inc., a Texas-based fashion accessories company, used a single-class Part 26A restructuring plan to restructure $150 million of unsecured notes governed by New York law. To access the UK tool, Fossil incorporated a new UK subsidiary and changed the governing law of the note indenture from New York law to English law, similar to Syncreon.
Argo Blockchain (2025) – Ability to preserve the listing on Nasdaq
Argo Blockchain plc, a crypto‑mining company listed on Nasdaq, restructured through a UK plan to avoid collapse into administration. A key risk in Argo’s case arose under Nasdaq Listing Rules 5110(a) and 5110(b). These rules can trigger delisting if an issuer (1) files for bankruptcy or comparable foreign restructuring law; or (2) completes a transaction that resets ownership or control in a manner similar to a distressed sale. Nasdaq accepted that a UK Part 26A restructuring plan is not equivalent to a bankruptcy proceeding, allowing Argo to preserve its Nasdaq listing because its restructuring was legally framed and accepted as a UK restructuring (rather than a bankruptcy), even though, in economic terms, it performed many of the same functions as a Chapter 11 reorganisation.
New Fortress Energy (2026) – One of the largest Part 26A restructurings to date
New Fortress Energy’s UK restructuring plan was confirmed by the English High Court on 18 June 2026 following overwhelming (~99%) creditor support, marking a major step in a large-scale, consensual cross‑border recapitalisation. The plan restructures over $9 billion of debt through a debt‑for‑equity exchange, significantly deleveraging the group while splitting it into a publicly listed ‘New NFE’ and a creditor-owned ‘BrazilCo’, with creditors taking a majority equity stake and existing shareholders retaining a reduced minority position. The restructuring preserved a publicly listed entity, New NFE, maintaining market listing rather than resulting in a take‑private or liquidation scenario. In parallel, the plan companies sought recognition of the English proceedings as ‘foreign main proceedings’ in the Bankruptcy Court for the Southern District of New York.
Conclusion
The UK restructuring plan has become a proven and highly flexible tool for cross-border financial restructurings, particularly when speed, targeted balance-sheet compromise, preservation of value, and avoidance of a formal bankruptcy are important. Its ability to bind dissenting classes, combined with the absence of a strict absolute priority rule, gives companies and stakeholders a broader range of outcomes than would typically be available under Chapter 11, provided the court is satisfied that the statutory conditions are met and that the allocation of restructuring value is fair.
Recent cases – including Argo Blockchain and New Fortress Energy – illustrate the regime’s practical utility for listed companies, large international groups, and complex capital structures. For companies with substantial English-law debt or UK ties, a Part 26A plan enables a surgical, debtor-driven restructuring of specific liabilities on a faster timeline and generally lower cost base than Chapter 11. It can cram down entire classes of holdouts if necessary, without the rigidity of U.S. absolute priority rules, while still protecting dissenters via the no-worse-off test and court oversight.
At the same time, Chapter 11 remains a powerful and, in some cases, more comprehensive restructuring framework. Its automatic stay, established DIP financing regime, ability to address operational liabilities, and strict priority protections for senior creditors can be critical when a company needs immediate breathing space, new-money financing, or a court-supervised operational turnaround. A pre-packaged or pre-arranged Chapter 11 may also deliver a timetable comparable to a UK restructuring plan in appropriate circumstances.
The choice between a UK restructuring plan and Chapter 11 (or a hybrid approach of a UK restructuring coupled with a U.S. Chapter 15) should be driven by the company’s capital structure, liquidity position, governing law of its debt, listing considerations, stakeholder dynamics, and the extent of operational restructuring required. Chapter 11 remains unmatched for addressing operational turnarounds or multi-faceted reorganisations beyond financial liabilities. For some groups and companies, the UK plan will offer an efficient and controlled route; for others, Chapter 11 will remain indispensable.
Increasingly, complex global restructurings may benefit from a coordinated approach that combines UK restructuring plans with Chapter 11, Chapter 15 recognition, or other international restructuring tools. Used in the right circumstances, the UK restructuring plan is not simply an alternative to Chapter 11 but a complementary and increasingly important part of the cross-border restructuring toolkit. For complex global groups, a hybrid approach can be used (e.g. combining UK plans, Chapter 11/Chapter 15, or even new European procedures like the Dutch WHOA) to achieve a comprehensive solution across different jurisdictions.
If you have any questions, or would like additional information, please contact one of the attorneys on our Financial Restructuring & Reorganization team.
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