Schemes of Arrangement and Part 26A Restructuring Plans: New Insights from the High Court

In this article we review the development of two debtor-in-possession proceedings in England and consider the implications that the Practice Statement and Briefing Paper raise.

The Background

On 18 September 2025, the English High Court:

• issued the Practice Statement (Companies: Schemes of Arrangements and Restructuring Plans under Part 26 and Part 26A CA 2006) (the Practice Statement); and

• published a briefing note authored by Chief ICC Judge Briggs entitled Insolvency and Restructuring Jurisdiction (the Briefing Paper).

Whilst the minutiae set out in the Practice Statement will undoubtedly be of primary relevance to legal advisers acting for distressed companies and their stakeholders in schemes of arrangement (Schemes) and Part 26A restructuring plans (Part 26A Plans), this development will be of interest to all professional advisers (and their clients) dealing with corporate distress and insolvency.

The Practice Statement and Briefing Paper serve as the judiciary’s reflection on the function and effect of these two primary debtor-in-possession proceedings five years on from the implementation of the Corporate Insolvency and Governance Act 2020 (CIGA 2020). As such, they provide a useful insight into how the English courts view the evolution and future development of the jurisdiction’s insolvency regime, both from a domestic as well as international perspective.

The History and Overview of Schemes and Plans in England

Schemes in England date back to the 19^th century and were originally available only to companies in the process of being wound up (though not necessarily insolvent). The requirement for companies to be in the process of being wound up was dropped in the early 20^th century. Otherwise, historical Schemes (as governed by successive statutory regimes) were broadly similar to what we have today under Part 26 CA 2006 – i.e.:

• financial distress is not a prerequisite; and
• in consideration for some genuine benefit, a company and its creditors and shareholders may enter into a scheme in which one or more classes compromise their rights provided three-quarters in value and numbers of each class agree and subject to the court’s sanction.

Schemes became particularly popular with telecoms companies during the ‘dotcom bubble’ due to their flexibility. For example, in the case of Re Telewest, Schemes enabled bondholders to equitise their claims in the restructured company. Since then, they have become a well-regarded means of restructuring. 

Part 26A Plans are a far more modern development and were implemented by CIGA 2020, largely in the context of the COVID-19 pandemic. Procedurally and substantively, they share many features with Schemes and achieve the same purpose. However, Part 26A Plans differ from Schemes in three key respects:

1. Companies must demonstrate financial distress (defined in the legislation as “financial difficulties”).
2. Approval. Only 75% of each class of shareholder and / or creditor in value need approve the plan (rather than also obtaining the consent of three-quarters in number of each class).
3. The court’s power of “cross-class cram down” enables the court to sanction a Part 26A Plan notwithstanding that one or more classes do not consent, provided that the court is satisfied of two conditions, namely that:
   1. the dissenting classes would not be worse off under the Part 26A Plan than they would under the “relevant alternative” (i.e. the most likely outcome if the plan is not sanctioned); and
   2. at least one class, which has a genuine economic interest in the company under the relevant alternative, has voted in favour of the Part 26A Plan.

In respect of Part 26A Plans, it is worth noting the influence of the United States bankruptcy regime, specifically Chapter 11 bankruptcy proceedings, which has long been regarded internationally as the lodestar of debtor-in-possession insolvency proceedings. Similarly, to Part 26A Plans, Chapter 11 does not impose a numerosity condition and gives federal bankruptcy courts the power to bind dissenting classes. However, one key distinction is that Chapter 11 imposes an ‘absolute priority rule’ which prevents a court from sanctioning any arrangement that benefits a junior class of creditors, unless all dissenting senior classes of creditors are fully paid out or receive sufficient value on their claims. No such rule exists under Part 26A Plans, therefore arguably providing stakeholders with more flexibility to agree, for example, ‘cram-up’ plans, as in the case of Re Amicus Finance, where a secured lender class became bound to a Part 26A Plan despite its opposition. 

Since their introduction in England, Part 26A Plans have been widely used in high value restructuring. However, their procedural complexity (and to a lesser extent Schemes) make them less suitable for small to medium-sized companies seeking to restructure their liabilities, largely due to the costs involved with convening and sanctioning plans in court.

The Revised Practice Statement and Briefing Paper

The Practice Statement will, from 1 January 2026, replace the pre-existing practice statement issued on 26 June 2020. The new Practice Statement reflects the rise in urgent and / or contested restructuring proposals requiring the court’s sanction. In recent cases including Re Petrofac, the court has been clear that parties have an obligation to keep litigation costs arising from restructurings under reasonable and proportionate control.

Perhaps of greater interest to non-lawyers is the short, three-page Briefing Paper by ICC Judge Briggs, in which he advocates widening the jurisdiction of ICC Judges (ICCJs) to determine the convening and sanctioning of Schemes. The Briefing Paper is divided into four parts:

1. Part 1 considers international perspectives on the importance of fostering specialist insolvency courts.
2. Part 2 summarises how England, the US, and Singapore, are recognised as leading jurisdictions for insolvency and restructuring, with the US federal court in particular having developed a highly specialised insolvency court with highly trained judges. 
3. Part 3 examines the role of ICCJs. While ICCJs broadly have the same jurisdiction as English High Court Judges (HCJs), Briggs J notes that ICCJs are prohibited from convening meetings and sanctioning final meetings. This restriction is at odds with the broader development of ICCJs’ roles in the judiciary and tends to favour less experienced and academically qualified judges, while simultaneously hindering the development of “the English specialist court in a manner that is compatible with leading insolvency and restructuring jurisdictions” (a notion with which he submits HCJs would agree).
4. Part 4 recommends that ICCJs share the jurisdiction to determine schemes with the High Court. If adopted this would increase the number of eligible judges from 17 to 24. Briggs J further recommends that ICCJs should hear all Schemes at first hearing, where the parties would be invited to indicate the complexity of the Scheme and the likelihood of there being a contested hearing. These factors would then determine whether the convening and final hearing should be before a HCJ or an ICCJ.

HFW Comment

Taken together, the Practice Statement and Briefing Paper reflect the judiciary’s recognition of the increasing relevance and use of debtor-in-possession proceedings for international, cross-border restructurings. The court also recognises the need to take a more active role in managing proceedings and controlling costs.

Whilst the Practice Statement does not directly address the issue of small to medium-sized companies having limited recourse to Part 26A Plans and Schemes, it does better enable a more efficient allocation of both the parties’ and the court’s resources for restructurings requiring the court’s sanction. Given Briggs J’s recommendations, in the future we are likely to see an increasingly specialised restructuring court, which may lead to greater adoption of Schemes and Part 26A Plans by smaller and medium-sized companies. In the meantime, parties to debtor-in-possession proceedings in England will want to monitor the costs they are incurring and try to limit the issues in dispute given the Practice Statement reflects a more scrutinous High Court.

Maria Alexandroff, Trainee Solicitor, assisted in the preparation of this briefing.