In a timely update to the UK's restructuring toolkit, the Chancellor of the High Court Sir Julian Flaux has issued a revised Practice Statement (2025 PS) on Schemes of Arrangement under Part 26 and Restructuring Plans (RPs) under Part 26A of the Companies Act 2006. Published on 18 September 2025, this document replaces the current 2020 version and applies to cases where convening hearings are listed on or after 1 January 2026. Coming amid a surge in financial restructurings driven by economic headwinds, rising interest rates, and post-pandemic debt maturities, the 2025 PS aims to modernise procedures, enhance efficiency, and address judicial bottlenecks highlighted in recent high-profile cases like Adler Group, Thames Water, Petrofac and Waldorf, particularly now more fairness and valuation challenges are being mounted by dissentient creditors.
The revisions stem from a May 2025 consultation that drew input from stakeholders, including the City of London Law Society and the Law Society, emphasising the need for clearer guidance on class composition, timetables, and contested issues. With over 50 RPs sanctioned since their introduction via the Corporate Insolvency and Governance Act 2020 (CIGA), and schemes remaining a staple for M&A and other debt workouts where cross-class cramdowns are not required, these changes promise a more predictable and proportionate process. For middle-market debtors (typically owner-managed businesses with £10-100 million in turnover facing covenant breaches or supplier disputes) this could democratise access to court-backed rescues, reducing costs and timelines that have historically favoured larger corporates.
Key Changes: A Focus on Efficiency and Transparency
The 2025 PS introduces targeted reforms across the lifecycle of schemes and RPs, from pre-filing preparation to sanction hearings. These build on lessons from the 2020 framework, which, while effective, struggled with procedural ambiguities amid rising caseloads (a 25% increase in 2024-2025, per Insolvency Service data) with many more dissentient creditors willing to expend cost and expense to challenge senior creditor-led RPs. Here's a breakdown of the most significant updates:
Upfront Listing and Timetabling Requirements: Applicants must now file a "listing note" alongside the claim form, providing time estimates for convening and sanction hearings, an indicative overall timetable (including appeals), and summaries of the company's financial position and potential contested issues. Updates to this note must be notified promptly. This shift mandates early planning, replacing ad-hoc scheduling and aims to compress end to end timelines from the typical 8-12 weeks to a more streamlined 6-10 weeks in uncontested cases. The downside to this requirement, as recently highlighted by both R3 and the ILA, is that filing claim forms will “expose the company name and trigger market speculation or cross defaults regardless of sealing, less central stakeholders may also seek to escalate their concerns publicly “. Anonymously securing a hearing date on an informal basis is often necessary to limit the degradation of the business of the company whilst negotiations are continuing with its financial creditors. There is some concern that the requirement to file a claim form (which is public unless steps are taken under the CPR to anonymise the claim form) may in fact create a more protracted lead time until the convening hearing which may be undesirable for companies facing liquidity issues.
Enhanced Judicial Oversight and Case Management: Convening hearings for creditor schemes and RPs will be listed before a High Court Judge (up from Insolvency and Companies Court Judges in some instances), ensuring more specialist input from the outset. Courts are empowered to issue robust case management directions, such as defining key issues (e.g., jurisdiction under Part 26A's Conditions A and B), setting evidence timetables, and even appointing experts for valuations. This proactive approach targets early resolution of disputes, such as the allocation of the “restructuring surplus” in Adler Group and in Waldorf, and class composition challenges seen in Smile Telecom and in Hurricane Energy.
Improved Notification and Evidence Standards: A new "Practice Statement Letter" must be sent to affected parties before convening hearings (for High Court cases), outlining the proposal's purpose, meeting details, and enquiry routes. Evidence bundles, including the final explanatory statement, must be filed at least 14 days in advance (an improvement from the looser 2020 guidance) detailing creditor engagement and vote-handling for indirect holdings. Whilst the requirement to give details of creditor engagement may encourage greater dialogue and reduce the likelihood of challenge, the reality of invoking the cross-class cram down under an RP is that engaging with impaired creditor classes that are receiving minimal value in the restructuring, extensive engagement is unlikely to be fruitful. However, this may avoid situations such as in the Enzen RP where HMRC’s objections at the convening hearing were later withdrawn following a deal being cut following the convening hearing.
Explanatory statements are now required to be "concise and case-appropriate," starting with a one-page summary of commercial impacts and annexing key documents with access instructions. Objections must be flagged seven days pre-convening hearing, with bundles filed five days ahead. This may deter dissenting creditors from appearing at the convening hearing on short notice (having produced minimal objections previously) in an attempt to gain leverage or to derail the restructuring process, which will no doubt be viewed negatively by the court. Further, this more case appropriate approach may be particularly welcomed by mid-market debtors where the perceived costs of RPs have resulted in more companies instead entering administration ultimately with more stakeholder value placed at risk.
Fairness and Contest Resolution: The 2025 PS stresses addressing international jurisdiction and sanction refusal risks at the convening stage, with courts able to direct further hearings for unresolved matters. This aligns with recent jurisprudence emphasising "cogent evidence" for cram-downs in RPs, potentially curbing appeals (which hit 15% in 2025).
These changes are evolutionary rather than revolutionary, preserving the core mechanics of schemes (consensus-driven compromises) and RPs (with cross-class cram-down). Yet, the 2025 PS responds directly to practitioner feedback: such as the 2020 PS's vagueness on timetables led to delays in cases like Waldorf, while evidential gaps fuelled reversals in Adler Group. By embedding active case management, the new framework promotes proportionality, vital in an era where it is likely that the changes will see RPs used more by mid-tier debtors, particularly as an alternative to company voluntary arrangements, to utilise cross-class cramdowns provided they can persuade their senior creditors to vote effectively to compromise more junior creditor classes.
Why These Reforms Benefit Middle-Market Debtors
Historically, schemes and RPs have been cost-prohibitive for these businesses (legal fees typically exceed £1,000,000 for the debtor, quite apart from financial advice and separate independent valuation advice or potential adverse creditor costs), with timelines stretching amid procedural wrangling. The 2025 PS addresses this head-on, offering tangible upsides that could boost rescue rates by 20-30% for sub-£100 million entities, based on early firm modelling.
First, cost efficiencies through streamlined processes. The mandatory listing note and 14-day evidence filing force front-loaded preparation, minimising mid-process revisions that inflate bills. For a typical middle-market RP (say, compromising £20-50 million in bank debt and landlord claims) this could shave £100,000-£200,000 off fees by avoiding the "discovery" phase common in contested hearings. This may also assist dissentient creditors focus on collating cogent financial and/or valuation evidence rather than only doing so nearer to the convening hearing which judges have criticised in the past on cases such as MGT Teeside 2024’s RP.
Second, enhanced predictability and reduced appeal risks. Middle-market restructurings often involve fragmented creditors (trade suppliers, HMRC, or junior lenders) who lack resources for prolonged fights. The PS's emphasis on early issue-spotting (e.g., class composition via the "fracture test") and case management directions allows courts to triage disputes upfront, as in Thames Water's regulatory deference model. Predictability also aids financing: lenders are more willing to extend facilities knowing appeals (a key 2025 pain point) are less likely.
Finally, greater accessibility for non-large-cap deals. The concise explanatory statement requirement (tailored to "case-appropriate" detail) lowers the barrier for owner-managers unfamiliar with complex disclosures. Paired with the Practice Statement Letter's clear notifications, this empowers smaller stakeholders to engage meaningfully, fostering consensus and reducing cram-down reliance (which invites scrutiny under Petrofac). For Addleshaw Goddard's clients in sectors like hospitality, retail or construction, where 60% of distress involves unsecured claims, this could tip the scales toward viable workouts over company voluntary arrangements or administrations—preserving 15-25% more enterprise value than in the case of the latter, per our internal benchmarks.
Looking Ahead: A Catalyst for Middle-Market Resilience
The 2025 PS is more than procedural housekeeping, it's a pragmatic response to a restructuring landscape where middle-market insolvencies rose 18% in Q2 2025 alone (ONS figures). By prioritising efficiency without diluting safeguards, it positions schemes and RPs as inclusive tools, not elite options. At Addleshaw Goddard, we're already integrating these into client strategies: advising on pre-2026 pilots to test listing notes and leveraging our national and international platform for rapid case management support.
For mid-market firms / businesses, balancing growth ambitions with cash squeezes, these changes signal opportunity. Proactive engagement now could secure rescues that seemed out of reach. As Sir Julian Flaux noted in the consultation foreword, the goal is "proportionate justice" for viable businesses. In an uncertain economy, that's music to a restructurer's ears.
