This month saw the High Court in London sanctioning the second restructuring plan proposed by Waldorf Production UK PLC. This is undoubtedly one of the biggest and most significant rulings of the year and becomes the most contested restructuring decision in recent UK insolvency law. The High Court approved the Plan despite strong opposition from HMRC, which challenged both the fairness and legality of the proposal. This, in itself, is groundbreaking and will put the Inland Revenue at red alert for future actions of its type.
A brief history of the action explains how the restructuring arose from Waldorf’s severe financial distress following the UK Energy Profits Levy and mounting operational pressures. The approved plan enabled a US$205 million sale of much of the business to Harbour Energy. A central controversy was Harbour’s desire to preserve Waldorf’s substantial tax losses, reportedly worth hundreds of millions of dollars in future tax relief, while HMRC’s own Energy Profits Levy claims of approximately US$94 million were compromised to around 14% recovery. HMRC argued this amounted to unfair tax avoidance and an abuse of the restructuring plan process.
It appeared to be a fair and workable argument. The finding places a large financial cat among the Inland Revenue’s pigeons.
The High Court rejected HMRC’s arguments and exercised the cross-class cram-down power under Part 26A of the Companies Act 2006. Mr Justice Green held that HMRC did not possess an effective veto merely because of its public role as tax collector, and that the statutory “no worse off” test was satisfied because HMRC would recover less in the relevant alternative insolvency scenario. The judgment also reinforced the narrower interpretation of the “no worse off” analysis established in Petrofac.
These are two key factors of Part 26A and this case saw statutory wording come fully alive as they were tested in a highly public and controversial situation.
Importantly, the decision reflected lessons from Waldorf’s first failed Restructuring Plan in 2025 which had been rejected for inadequate creditor engagement and unfair allocation of restructuring benefits. In the second Plan extensive negotiations and a rare formal mediation process helped secure broader creditor support, although HMRC refused to participate in mediation. The court openly and strongly criticised this stance.
The ruling is expected to have major implications for future UK Restructuring Plans, particularly those involving HMRC liabilities, tax assets, judicial fairness scrutiny, and the use of cross-class cram-down mechanisms in complex cross-border restructurings. The Mann & Associates global Newsletter will bring updates and commentary to you as it develops throughout 2026.