The Court considered whether it should sanction a Restructuring Plan (RP) for a company with a total debt burden of circa £6m, particularly where HMRC had presented a winding up petition, and concluded that it should.
The relevance of this case is summarised in the closing remarks of the Judge who said:
“It is pleasing to see that the machinery of Part 26A is being successfully used by a small company in evident financial distress, and that the jurisdiction is not the preserve of the large corporation.”
In a world of RPs refinancing billion pound debt exposures, appeals and talk of “leapfrogging” to the Supreme Court, this decision demonstrates that RPs can be available to the masses.
The company had total debts of circa £6.3m, with just less than £900K owed to HMRC. HMRC presented a winding up petition against the company, which sought to restructure its debts through a proposed RP.
HMRC, as a separate preferential creditor class, approved the plan, as did 99.5% of the unsecured creditors, as a separate class, with 90% in value of those unsecured creditors voting.
The Judge was satisfied that the RP gave a better return to creditors than the relevant alternative, most likely a compulsory liquidation, and, finding that the RP met all of the other jurisdictional requirements, sanctioned the plan.
It is not known how much cost was incurred in the process, but the decision demonstrates that a RP can be used to restructure debt at a typical mid market level.
Re DSTBTD Limited [2025] EWHC 2366 (Ch)
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