Despite meeting statutory jurisdictional requirements under Part 26A of the Companies Act 2006, the High Court declined to exercise its discretion in favour of sanctioning Waldorf Production UK Plc’s restructuring plan in August 2025due to concerns about fair allocation of value and lack of meaningful engagement with unsecured creditors.

Waldorf then sought and was granted permission to “leapfrog” its appeal directly to the Supreme Court.  The progress of this appeal was being closely tracked by industry professionals as it offered the possibility of Supreme Court clarification around how the issue of fairness should be approached.  However, restructuring professionals are destined for disappointment on this front, with news now out that Waldorf has withdrawn its appeal.  This means that the Court of Appeal’s trilogy of cases—Adler, Petrofac, and Thames Water—now stand as the definitive authority on fairness in restructuring plans.

So how do plan companies approach the question of fairness and the fair allocation of the benefits generated by the plan?  The principles that apply are these:

Petrofac Principle

In Petrofac, the Court of Appeal emphasised that fairness requires genuine negotiation and engagement with dissenting creditor classes. Even if creditors are “out of the money” in the relevant alternative (such as administration or liquidation), the Court expects plan companies to demonstrate that they have considered those creditors’ interests and attempted to reach a compromise.

Thames Water Principle

In Thames Water, the Court of Appeal clarified that fairness involves proportionality in value distribution. Creditors who are “in the money” must not receive disproportionate benefits at the expense of others. The court stressed that fairness requires a balanced allocation of restructuring gains, even where statutory thresholds are met.

Adler Principle

In Adler (also known as AGPS Bondco Plc) the Court of Appeal overturned the sanctioning of Adler’s plan on the basis that the pari passu principle applied in the relevant alternative therefore creditors should also be treated on a pari passu basis under the plan itself, unless there is sufficient reason justifying departure from that principle.

Implications for Plan Companies

With Waldorf withdrawing its appeal, the Court of Appeal’s framework is – for the time being – final. Plan companies must:

  • Engage meaningfully with all creditor classes, including those likely to be crammed down.
  • Demonstrate proportionality in how restructuring value is shared.
  • Evidence fairness beyond statutory compliance—showing both process (negotiation) and substance (equitable outcomes).
  • Prepare for judicial discretion: Courts retain the power to refuse sanction even if jurisdictional conditions are satisfied.

Concluding Thoughts

Many practitioners were hopeful that a Supreme Court decision would provide clarity on how the surplus generated by a plan should be distributed fairly.   The thinking has moved from the earlier cases, stemming from Virgin Active, where the views of out of the money creditors could essentially be ignored, to the position now set out in Petrofac and Thames Water.  A Supreme Court decision on the approach to take was therefore welcomed.

Accordingly, the withdrawal of the Waldorf appeal is likely to be disappointing to many, but we do not expect this to have an adverse impact on RPs or their usefulness. Clear principles are outlined in Petrofac, Thames Water and Adler.  Of course, the risk of challenge on fairness remains, but the new Practice Statement will hopefully reduce some of those risks with enhanced case management.

For the time being plan companies must treat fairness as one of the decisive factors—not an afterthought.