The High Court has recently provided clarity on whether liquidators, or the firms supporting them, can limit their liability when acting in a Members’ Voluntary Liquidation (MVL).
The case of Pagden[1] confirms that while firms supporting liquidators may be able to limit liability in certain circumstances, liquidators themselves cannot.
New guidance is the latest in a move to iron out the practical wrinkles from Part 26 and 26A of the Companies Act 2006. On 18 September 2025, the Chancellor of the High Court published a revised Practice Statement regarding Schemes of Arrangement and Restructuring Plans (the “Practice Statement”). This follows a consultation on a draft launched in May 2025, in order to further the aim of updating the previous practice statement in line with practical experiences over the last five years. The Practice Statement will apply to cases initiated on or after 1 January 2026.
The ability to cram down dissenting creditors in a Restructuring Plan (RP) is a helpful tool to ensure that a proposed restructuring is not derailed. But ultimately the power rests with the court in deciding whether to cram down an RP on dissenting creditors.
In the High Court decision of Pagden v Ridgley [2025] EWHC 2674 (Ch), Mr Justice Foxton considered an appeal from a decision by ICC Judge Greenwood, who previously dismissed a challenge to the fees charged by an administrator for selling land subject to a fixed charge.
On 8 October 2025, the Court approved a significant milestone in the long-running insolvency proceedings of Lehman Brothers International (Europe) (LBIE). After 17 years in administration, the Court granted an order terminating the administrators’ appointments and paving the way for LBIE to enter a members’ voluntary liquidation (MVL).
In a decision regarding the use of equity rights offerings with potentially significant ripple effects across the restructuring industry, Judge Andrew Hanen of the United States District Court for the Southern District of Texas reversed Bankruptcy Judge Christopher Lopez’s order confirming the plan of reorganization of ConvergeOne Holdings and affiliates (the “Debtors”), holding that the plan violated the requirement of equal treatment of similarly situated creditors under 11 U.S.C. § 1123(a)(4).[1]
The decision calls into question the ability of debtors to utilize the now-common practice of implementing prepackaged bankruptcy cases through plan equity-rights offerings and backstop agreements. Backstop agreements, whereby prepetition investors agree to purchase equity not sold in debtors’ equity rights offerings, are routinely integrated into DIP facilities and negotiated as part of Restructuring Support Agreements (“RSAs”). Such RSAs have become the norm in chapter 11 cases, particularly in prepack cases. However, when the opportunity to participate in those backstop agreements and related fees is not offered to the entire class of creditors, the plan may not be confirmable under section 1123(a)(4).
The High Court has refused to use its discretion to sanction a restructuring plan proposed by Waldorf Production UK Plc (Waldorf or the Company) which entailed a cramdown of the company’s unsecured creditors pursuant to Part 26A of the Companies Act 2006.
Background
Waldorf (and its wider group) are engaged in the exploration and production of oil and gas in the UK Continental Shelf (the “UKCS”). At a very high level, and for the purposes of the proposed restructuring plan, the Company had three classes of creditors: (i) bondholders who had lent monies under various bonds issued by the Company and who benefitted from certain security (the “Bondholders”), (ii) HMRC, an unsecured creditor owed c.US$75m (representing EPL and certain corporation tax liabilities), and (iii) a contractual counterparty (“Capricorn”) owed c.US$29m pursuant to deferred consideration arrangements under a previous sale transaction.
HMRC has issued new guidance explaining its expectations for the proportionate and appropriate use of Notices of Intended Dividends (NOIDs) in an MVL in light of what it says are challenges created by practitioners issuing a NOID at the start of an MVL where doing so might be inappropriate.
On March 4, 2025, the U.S. Court of Appeals for the Second Circuit issued a precedential decision in Little Hearts Marks Family II L.P. v. Carter (In re 305 East 61st Street Group LLC), 130 F.4th 272 (2d Cir. 2025), delineating the boundary between claims a member of a limited liability company may assert in their own right and those that are derivative in nature and thus may be prosecuted only by the LLC. The decision offers important guidance in particular for real estate investors, LLC members, and bankruptcy practitioners generally.
On June 27, 2025, the U.S. Supreme Court issued its decision in Trump v. CASA, Inc.,[1] which materially limited the ability of federal courts to issue so-called “universal” or “nationwide” injunctions. Injunctions are common in bankruptcy cases, sometimes at the outset and nearly always as a part of a debtor’s proposed plan to reorganize or liquidate. Does the CASA decision restrict bankruptcy courts from approving a (i) preliminary injunction early in the bankruptcy case and/or (ii) plan that includes an injunction barring third parties from litigating against non-debtor parties (i.e., a third-party release)? Based on the Supreme Court’s analysis, CASA may present an opportunity for a party to present a novel argument that preliminary injunctions and/or plan releases, consensual or nonconsensual, are impermissible.
