More restructuring plan caselaw

This case concerned a restructuring plan which was opposed by HMRC. HMRC also relied on 'In re Nasmyth', a case in which HMRC's role as creditor had been specifically considered.

The court distinguished Nasmyth on the ground that:

  • The relevant corporate group in that case owed a larger aggregate debt, some of which had accrued over a much longer period
  • In Nasmyth time to pay agreements for the tax debt of the group had been breached
  • The proposed distribution to HMRC in Nasmyth was only 4.8p in the £, described as "tiny" in both absolute and relative terms compared to the distribution to be made to one of the secured creditors whereas in the instance case HMRC would be paid a return of 33.5p in the £ within 30 days.

As for HMRC's main point that the plan company has used its debts due to HMRC to fund the business since March 2023 while the plan was being pursued, the plan company had adduced evidence that it had lacked sufficient funding to pay all its creditors in full; and that notwithstanding that evidence HMRC had declined to cross-examine the relevant plan company witness.

The court held that those creditors the plan company continued to pay were (and remained) critical to the preservation of its business. In this regard, although HMRC went unpaid, so too did a number of other non-critical creditors, including significantly, the landlords of the loss-making sites.

In the circumstances the court held that it should exercise its discretion to sanction the plan.

In re Prezzo, sanction hearing 5 July 2023

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