The court ruling yesterday in Re Virgin Active Holdings Limited [2021] EWHC 1246 has paved the way for restructuring plans under Part 26A to the Companies Act 2006 ("RPs") to be used to compromise the rights of landlords, financial creditors and other unsecured creditors provided the company shows that those creditors are "out of the money". There may even be no need to ask those compromised creditors to vote on the RP.
This is one of the most significant changes to the UK restructuring and insolvency market for years.
The decision emphasises the very broad scope of RPs and is likely to make them a feature of the restructuring market going forward – creating very different dynamics for stakeholders. It may also place significant reliance on valuation evidence as to those creditors likely to receive a distribution in an insolvency (who are therefore "in the money").
Our Restructuring, Turnaround and Insolvency team has prepared a briefing note summarising the implications of this change and how it may affect the interests of landlords and other financial creditors going forward.
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