How to Implement a Part 26A Restructuring Plan in the United Kingdom (2026): Step-by-step Guide

Understanding how to implement a Part 26A restructuring plan in the United Kingdom (2026) is essential for any company facing financial distress that needs a binding creditor compromise without entering a formal insolvency procedure. Introduced by the Corporate Insolvency and Governance Act 2020 and codified in Part 26A of the Companies Act 2006, the restructuring plan allows a company, or any of its creditors or members, to propose a compromise or arrangement that, once sanctioned by the court, binds all affected classes of creditors, including dissenting ones.

The procedure has grown in significance since its introduction, and the revised Courts & Tribunals Judiciary Practice Statement published in September 2025 has materially raised evidential and procedural expectations for plans proposed during 2026. This guide sets out every stage of the restructuring plan process UK practitioners need to follow, from initial eligibility assessment through court hearings, voting, sanction and post-implementation monitoring.

Overview of the Part 26A Restructuring Plan and Who It Applies To

A Part 26A restructuring plan is a court-supervised procedure under sections 901A–901L of the Companies Act 2006. It enables a company that has encountered, or is likely to encounter, financial difficulties affecting its ability to carry on business as a going concern to propose a compromise or arrangement with its creditors or members. The plan is proposed to the court by the company itself, or by a creditor or member of the company.

Once sanctioned, the plan is binding on all persons within its scope, including classes of creditors who voted against it, provided the court exercises its “cross-class cram-down” power under section 901G. This distinguishes the Part 26A plan from the older Part 26 scheme of arrangement, which requires approval from every class.

Before committing to a restructuring plan, the board and its advisers should work through a structured decision framework:

• Viability test. Can the company continue as a going concern if the proposed compromise is implemented? A credible business plan and cashflow forecast are prerequisites.
• Alternative options appraisal. Has the company considered a company voluntary arrangement (CVA), a Part 26 scheme of arrangement, or a pre-pack administration? The court will expect evidence that the plan delivers a better outcome than the most likely alternative, the “relevant alternative” analysis required by section 901G.
• Cross-border considerations. If the company or its group has creditors, assets or operations outside England and Wales, recognition and enforcement of the plan in foreign jurisdictions must be addressed at the outset.
• Stakeholder engagement. Early engagement with key creditor constituencies, senior lenders, bondholders, pension trustees, trade creditors, materially affects the speed and cost of the process.

Eligibility and Restructuring Plan Requirements

Not every company in financial difficulty will satisfy the eligibility for Part 26A. The statutory gateway conditions, set out in section 901A of the Companies Act 2006, require that two conditions are met. First, the company must have encountered, or be likely to encounter, financial difficulties that are affecting, or will or may affect, its ability to carry on business as a going concern. Second, the purpose of the compromise or arrangement must be to eliminate, reduce, prevent or mitigate the effect of those financial difficulties.

In practice, the restructuring plan requirements extend beyond the statutory text. The company must identify and classify every group of creditors whose rights are affected by the plan. Class composition is determined by reference to the similarity of creditors’ rights against the company, and to their treatment under the plan. Mis-classification of creditors is one of the most common grounds on which plans are challenged at the sanction hearing.

Before any court filing, the board should formally resolve to pursue the plan and minute the decision. The directors must be prepared to give evidence, typically by witness statement, that the company satisfies the financial difficulty condition and that the plan is preferable to the relevant alternative. Industry observers expect that, following the September 2025 Practice Statement, judges will scrutinise the quality and independence of this evidence more closely than in earlier cases.

Foreign and Group Company Considerations

A company does not need to be incorporated in England and Wales to propose a Part 26A plan. The English court has accepted jurisdiction over foreign-incorporated companies where there is a “sufficient connection” to England, for example, through English-law governed finance documents, a centre of main interests (COMI) in England, or substantial assets within the jurisdiction. Group structures may require coordinated plans across multiple entities, or a single plan covering the parent and its subsidiaries if the rights being compromised arise under the same instrument. Advisers should assess jurisdictional risk and recognition prospects (particularly in EU member states and the United States under Chapter 15) at the eligibility stage, before incurring court application costs.

Step-by-Step Procedure: How to Implement a Part 26A Restructuring Plan

The restructuring plan process UK practitioners follow runs from the initial internal decision through to post-sanction implementation. Each step below identifies the key actors, outputs and typical timeframes. The table at the end of this section consolidates the full timeline.

Step 1. Prepare the Restructuring Strategy, Options Appraisal and Viability Case

The board, CFO and restructuring adviser should prepare a comprehensive viability assessment. This includes a business plan, an integrated cashflow model projecting at least 13 weeks (and ideally 12 months) of cash requirements, and a formal options appraisal comparing the proposed plan against alternatives such as a CVA, scheme of arrangement, administration or liquidation. The output at this stage is a board-approved strategy paper that forms the foundation for the “relevant alternative” analysis the court will later require. Allow 1–3 weeks for this preparatory phase, depending on the complexity of the group and the availability of financial data.

Step 2. Gather Financial Evidence, Creditor Analysis and Class Composition

The finance team, insolvency practitioner and legal counsel compile a detailed creditor schedule. Every creditor whose rights are affected must be identified, with claim amounts, security status, priority ranking and contact details recorded. This schedule drives the class composition analysis: creditors are grouped into classes whose rights against the company and whose treatment under the plan are sufficiently similar that they can consult together with a view to their common interest. Independent expert evidence on valuation, including the recoveries creditors would receive in the relevant alternative, is typically commissioned at this stage. Allow 2–4 weeks.

Step 3. Draft Plan Documentation and Explanatory Statement

Legal counsel drafts the restructuring plan itself and the explanatory statement that must accompany it. The plan sets out the terms of the compromise, how each class of creditors’ claims are treated, the consideration offered, any conditions precedent and the implementation mechanics. The explanatory statement, required under section 901D, explains the effect of the plan on each class and provides the information creditors need to make an informed voting decision. In 2026, the explanatory statement must also address the “fairness evidence” the court expects: a clear articulation of why the plan is fair and equitable to each class, how the relevant alternative has been assessed, and why cross-class cram-down (if sought) is justified.

This phase typically runs concurrently with Step 2 and takes 2–4 weeks.

Step 4. Issue Claim Form, Seek Directions and Prepare for the Convening Hearing

The company issues a claim form in the Business and Property Courts (Insolvency and Companies List) seeking directions for the convening of meetings of each class. The claim form is accompanied by a court bundle including the draft plan, explanatory statement, creditor schedules, witness statements and draft directions order. The court will typically list a directions hearing within days of issue. At the directions hearing, the court determines the composition of classes, the date and form of the convening hearing, notice requirements and the voting window. Directions normally require service of the convening hearing notice and explanatory statement on all affected creditors at least 14–21 days before the convening hearing.

Step 5. Convening Hearing and Notice to Creditors

At the convening hearing, the court examines whether the classes have been properly constituted and whether the company has complied with its notice obligations. If satisfied, the court orders that meetings of each class be convened. The company must serve the notice, the explanatory statement and the proxy/voting forms on every creditor within each class, using the method directed by the court (post, email or electronic platform). Proof of service, typically an affidavit or certificate, must be filed before the sanction hearing. The court hearings for the restructuring plan are conducted in open court, and any creditor may appear to object to the class composition.

Step 6. Creditor Meetings and Voting

Creditor meetings may be held in person, by video conference or by written resolution, depending on the court’s directions. Each class of creditors votes separately. For the plan to be approved by a class, a majority in number representing at least 75 per cent in value of the creditors (or class of creditors) present and voting must vote in favour. Electronic ballots and proxy voting are routinely permitted. A scrutineer, often an independent insolvency practitioner, should be appointed to verify votes and report the results.

If one or more classes reject the plan, the company may still seek sanction under the cross-class cram-down provisions, provided at least one “in-the-money” class (a class that would receive a payment or have a genuine economic interest in the relevant alternative) has approved the plan.

Step 7. Sanction Hearing and Sealing of the Court Order

The sanction hearing is the final court stage. The court must be satisfied that: (a) the statutory requirements have been met; (b) the classes were fairly constituted; (c) the plan is fair and equitable; and (d) if cross-class cram-down is sought, no dissenting class member is worse off than they would be in the relevant alternative, and at least one in-the-money class voted in favour. Witness evidence, expert reports and the scrutineer’s voting report are placed before the judge. If the court sanctions the plan, the order is sealed and a copy must be delivered to the Registrar of Companies within 15 days.

The plan becomes effective upon delivery of the sealed order to the Registrar, or on such later date as the plan specifies.

Step 8. Post-Sanction Implementation and Monitoring

Implementation steps, debt write-downs, equity conversions, asset transfers, new facility drawdowns, are executed in accordance with the plan’s timetable. The company and its advisers should maintain a compliance log tracking each implementation milestone. Reporting to creditors, as specified in the plan or directed by the court, should be completed on schedule. Any failure to implement the plan as sanctioned may expose the company to enforcement proceedings or applications to vary the order.

Documents Needed for a Part 26A Restructuring Plan

Thorough documentation is critical to a successful plan. The court, creditors and any challenger will scrutinise every element of the filing. The checklist below sets out the documents needed for a restructuring plan, who is responsible for producing each item, the preferred format and any validity or practical notes. Companies should treat this as a minimum set: more complex plans, particularly those involving cross-border elements or cross-class cram-down, may require additional evidence.

Each document should be prepared and reviewed iteratively. The explanatory statement and fairness evidence bundle will typically go through multiple drafts as the creditor analysis is refined and expert reports are received. Beginning documentation early, ideally in parallel with Step 2 of the procedure, reduces the risk of delays at the court application stage.

Restructuring Plan Timeline and Key Deadlines

The restructuring plan timeline is driven by court scheduling. Exact dates depend on the judge’s availability, the complexity of the plan and whether any creditor raises objections at the convening hearing stage. The milestones below are expressed as offsets from the date the claim form is issued (Day 0). Companies should confirm specific hearing dates with the court office and build in contingency for listing delays.

In straightforward single-class plans with supportive creditors, the court stages from claim form to sanction can be completed in as few as 6–8 weeks. Complex multi-class plans, especially those involving cross-class cram-down or contested class composition, can take 10–16 weeks or longer. Pre-packaging the plan with key creditor groups before issuing the claim form is the single most effective way to accelerate the process. Courts have also shown willingness to grant expedited directions where urgency is demonstrated, for instance when a debt maturity or facility expiry is imminent.

Restructuring Plan Costs, Fees and Tax Considerations

The cost of a Part 26A restructuring plan varies significantly by case size, number of creditor classes, whether cross-class cram-down is sought, and whether any creditor contests the plan. The indicative ranges below are drawn from market practice and should be treated as order-of-magnitude estimates. Companies should obtain detailed fee proposals from advisers before committing to the process.

Tax consequences deserve particular attention. Where debt is written off or converted to equity, the company may realise a taxable credit for corporation tax purposes under the loan-relationship rules in the Corporation Tax Act 2009. The precise treatment depends on whether the debtor and creditor are connected parties and on the amount of the release. Stamp duty and stamp duty reserve tax may also apply to share issuances under the plan. Early engagement of specialist tax counsel can avoid unexpected liabilities that erode the financial benefit of the restructuring.

Fairness Evidence 2026: What Changes Under the Revised Practice Statement

The most significant procedural development affecting plans proposed in 2026 is the revised Practice Statement issued by the Courts & Tribunals Judiciary in September 2025. The revised statement updates the court’s expectations for Part 26 and Part 26A applications and tightens requirements in several areas that directly affect how advisers prepare a plan.

First, the Practice Statement emphasises that the company must present a fully articulated “relevant alternative” analysis at the convening hearing stage, not just at the sanction hearing. This means the financial evidence, including independent valuation reports and counterfactual recoveries modelling, must be ready earlier in the process than many advisers previously assumed.

Second, the court now expects the explanatory statement to address fairness proactively. Industry observers describe this expectation as a shift towards “fairness by design”, meaning that the plan itself should be structured from the outset to demonstrate equitable treatment across classes, rather than relying on the sanction hearing to resolve fairness challenges after the fact. Market commentary from PwC’s 2025–26 Global Insolvency Report highlights this trend, noting that judges are examining inter-class treatment, the allocation of restructuring surplus and the rationale for any differential treatment with materially greater rigour than in the earlier Part 26A cases.

Third, the Practice Statement clarifies service requirements, including that electronic service is acceptable where the court so directs, and specifies the minimum content for convening hearing notices. Advisers should review the full text of the revised Practice Statement and ensure that every element of the filing complies with its terms.

Common Pitfalls and How to Avoid Them

• Incorrect class composition. Grouping creditors whose rights or treatment differ materially into a single class is the most common basis for challenge. The fix is independent legal advice on classing, supported by expert evidence. Responsibility: legal counsel.
• Insufficient relevant-alternative evidence. Failing to present a credible, independently verified counterfactual undermines the court’s ability to assess fairness. Commission independent valuations early. Responsibility: restructuring adviser and forensic accountants.
• Late or defective service. Failure to serve the explanatory statement and notice on every affected creditor within the timeframe directed by the court can delay or derail the sanction hearing. Maintain a service log with proof of delivery. Responsibility: solicitors.
• Inadequate voting mechanics. Proxy forms that do not comply with the court’s directions, or electronic voting platforms that fail to authenticate voters, invalidate votes. Appoint an experienced scrutineer and test the platform before the voting window opens. Responsibility: company and scrutineer.
• Underestimating secured creditor issues. Plans that affect secured creditors’ proprietary rights attract heightened scrutiny. Ensure valuation evidence specifically addresses the value of security and the treatment of secured claims. Responsibility: legal counsel and valuation experts.
• Ignoring foreign creditor recognition. If the plan purports to bind creditors in jurisdictions that may not recognise an English court order, enforcement risk is real. Map recognition pathways (EU Recast Insolvency Regulation, UNCITRAL Model Law, US Chapter 15) at the outset. Responsibility: cross-border counsel.
• Failing to budget for expert costs. Plans that proceed without adequate budgets for independent valuers, forensic accountants and tax advisers often stall at the evidence-gathering stage. Obtain fee estimates from all professional advisers before the claim form is issued. Responsibility: CFO.
• Missing the 15-day filing deadline. The sealed sanction order must be delivered to the Registrar of Companies within 15 days. Failure to file renders the plan ineffective. Diarise the deadline immediately upon sanction. Responsibility: company secretary / solicitors.

Conclusion

Knowing how to implement a Part 26A restructuring plan in the United Kingdom (2026) requires rigorous preparation, precise court procedure and a proactive approach to fairness evidence that meets the heightened expectations set by the September 2025 Practice Statement. The process is demanding, but it offers a powerful tool: the ability to bind dissenting creditor classes through cross-class cram-down, preserving going-concern value and avoiding the value destruction of formal insolvency. Companies that invest in early options appraisal, independent valuation evidence, thorough creditor engagement and meticulous documentation will give themselves the strongest possible foundation for obtaining court sanction.

Those that treat the Part 26A restructuring plan as a last-minute filing exercise, without proper class analysis, fairness design or professional advisory budgets, risk costly delays, creditor challenges and, ultimately, a refusal of sanction that leaves fewer options on the table. The step-by-step procedure, documents checklist, timeline and cost framework set out in this guide provide a practical starting point for any adviser or in-house team preparing to navigate this process in 2026. For a tailored implementation review, find a business restructuring specialist through the Global Law Experts directory.

Sources

1. Courts & Tribunals Judiciary, Revised Practice Statement Part 26/26A (September 2025)
2. Companies Act 2006 (Part 26A), legislation.gov.uk
3. Corporate Insolvency and Governance Act 2020, legislation.gov.uk
4. PwC, The Development of Fairness in the UK Restructuring Plan (2026)
5. Ashurst, UK Part 26A Restructuring Plans: Timeline of Key Developments (January 2026)
6. Squire Patton Boggs, Restructuring Foreign Companies in England Using a Restructuring Plan
7. Global Restructuring Review, UK Judiciary Releases New Part 26A Practice Statement
8. Norton Rose Fulbright, UK Restructuring Plan: Cramming Up a Super Senior Creditor Class
9. Practical Law (Thomson Reuters), Part 26A Approach to Fairness