Restructuring plans: momentum in the mid-market

Following a period of uncertainty triggered by a trilogy of Court of Appeal decisions, the UK restructuring plan regime is showing renewed vitality, particularly in the mid-market. After a pause in momentum, recent plans launched by Las Iguanas, Poundstretcher and TG Jones signal a re energised use of Part 26A plans and a growing sense that the market has adapted to judicial clarifications on fairness and cross-class cram down.

From hesitation to confidence

The so called ’trifecta’ of Court of Appeal judgments in Adler, Thames Water and Petrofac[1] cast a shadow over the restructuring plan landscape, bringing sharper scrutiny to issues such as horizontal comparators, valuation evidence and the proper exercise of the court’s discretion in sanctioning cross-class cram down. In the immediate aftermath, many mid-market companies and their advisers adopted a cautious stance. The increased evidential burden, valuation complexity and litigation risk appeared, at least temporarily, to blunt enthusiasm for what had otherwise been an increasingly popular restructuring tool.

However, the recent wave of sanctioned plans suggests that the market has digested these decisions and recalibrated accordingly. Rather than deterring use, the appellate guidance together with the updated practice statement has helped crystallise a clearer framework for plan construction. Companies and creditors alike now appear more comfortable operating within a better-defined judicial paradigm.

A notable feature of this renewed momentum is the continued use of restructuring plans to rationalise property portfolios, particularly in the retail and casual dining sectors. The ability to compromise landlord claims selectively, coupled with the flexibility of class composition and cross-class cram down, has made the restructuring plan a powerful tool for estate optimisation.

What is now emerging is a ’trodden path’: a relatively well-understood playbook in which companies segment landlord creditors, differentiate treatment based on site viability and deploy sophisticated valuation evidence to justify differential outcomes. The recent plans sit squarely within this evolving template, demonstrating how the mechanism can be applied in a repeatable and increasingly predictable manner.

Importantly, this growing standardisation reduces execution risk. Creditors, including landlords, are now more familiar with the dynamics of restructuring plans and the likely outcomes in contested scenarios, which in turn facilitates negotiation and increases the prospects of consensual or near-consensual implementation.

Validation through performance

The success of the restructuring plan as a restructuring tool is ultimately measured not at sanction, but in post-restructuring performance. In this respect, River Island’s recent announcement of a return to profitability following its plan is a significant data point. It provides tangible evidence that, when properly structured and executed, restructuring plans can deliver sustainable operational turnaround not merely financial engineering.

River Island’s trajectory reinforces a broader point: restructuring plans are increasingly being deployed not as last-resort insolvency measures, but as proactive balance sheet and operational tools capable of preserving enterprise value. That shift in perception is particularly important in the mid-market, where stigma and timing considerations have historically hindered earlier intervention.

The return of the CVA

Alongside the resurgence of restructuring plans, there has been a noticeable re-emergence of the company voluntary arrangement (CVA), particularly in scenarios where compromises of secured or preferential creditors are not required. In such cases, the CVA retains clear advantages: lower cost, speed of implementation and a well-established legal framework with a comparatively limited evidential burden.

Recent CVAs in the retail and hospitality sectors have demonstrated that, where the creditor constituency is relatively simple and the focus is again on lease liabilities, the CVA can still be an effective and pragmatic solution. For mid-market companies with manageable capital structures and supportive creditor groups, the CVA continues to provide a viable alternative to the more complex restructuring plan.

This dual-track dynamic, where restructuring plans and CVAs are deployed according to the specific needs and creditor composition of the business reflects a maturing restructuring ecosystem. Rather than displacing CVAs entirely, the rise of restructuring plans has expanded the toolkit available to distressed companies and their advisers.

A more nuanced landscape

The current landscape is therefore one of greater nuance and choice. The initial uncertainty generated by appellate scrutiny has given way to a more stable environment in which the boundaries of the restructuring plan jurisdiction are better understood. The recent mid-market cases underline that, far from being deterred, stakeholders are now engaging with the regime in a more sophisticated and disciplined manner.

For companies seeking to address structural cost issues, particularly those tied to property portfolios, the restructuring plan has reasserted itself as a central tool. At the same time, the CVA’s continued relevance ensures that simpler cases can still be addressed efficiently without incurring the complexity of a full-scale plan.

Looking ahead

The renewed activity in the mid-market suggests that restructuring plans are entering a phase of consolidation rather than experimentation. As more examples emerge, the body of precedent will continue to grow, further refining market expectations and reducing uncertainty.

If the recent trajectory is maintained, we are likely to see an acceleration in filings over the coming 12 to 18 months, driven by both macroeconomic pressures and the increasing normalisation of the tool. In parallel, the coexistence of restructuring plans and CVAs will ensure that the UK restructuring framework remains flexible, adaptable and well-suited to the diverse needs of the mid-market.

In short, the pause following the Court of Appeal’s intervention now appears to have been just that, a pause. The market has regrouped, recalibrated and, importantly, resumed forward motion.

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