UK Courts Drive for Efficiency with New Rules for Restructuring Plans

A new Practice Statement, issued by the Chancellor of the High Court Sir Julian Flaux,  is expected to significantly impact how proceedings are conducted in relation to the sanctioning of schemes of arrangement and restructuring plans under Parts 26 and 26A of the Companies Act 2006 (Plans). 

While the Practice Statement does not change the overall structure for implementing Plans, it introduces new guidance that will affect how companies, creditors, and practitioners prepare and present plan applications to the Court going forward.

The new directions will apply to all applications for convening hearings listed on or after 1 January 2026.

Background and objectives

The Practice Statement will replace the 2020 guidelines and is designed to encourage efficiency in Plan applications. It places a stronger emphasis on identifying key issues early, providing clear notice to parties (including creditors), and implementing tighter case management. The aim is to reduce tactical disputes and ease the burden on court resources often associated with Plan applications. 

The Practice Statement itself sets out expectations for the conduct of all parties involved in Plan proceedings. Parties are expected to 'manage affairs and cooperate to avoid foreseeable timetabling pressures and facilitate orderly resolution'. This is consistent with the Overriding Objective of the Courts. What is likely to have a greater impact on applicants is the new expectation that they help identify contested issues at an early stage, with the aim of resolving them more efficiently. 

In addition, there is an expectation that issues of jurisdiction, class composition and the convening of meetings themselves be raised and addressed early in proceedings. The Practice Statement makes it clear that the Court expects parties to take a more proactive approach in identifying and dealing with potential areas of dispute before the application is issued.

Procedural changes

In order to meet these objectives, the Practice Statement introduces several procedural changes aimed at improving the Court’s ability to manage cases effectively. These changes are designed to provide the Court with more detailed information early on to build a more comprehensive view of how the matter will progress, anticipate objections and set appropriate timelines to ensure a more proactive and efficient case management process.

1. At the outset, companies must now file a 'listing note' with the claim form, including a proposed timetable, expected timings for each hearing and any issues which they anticipate might affect these. 
2. Applicants will be required, in advance of the convening hearing, to identify issues which may arise at the hearing such as those relating to jurisdiction or the constitution of meetings. Evidence in relation to those issues must be filed at least 14 days before the hearing allowing time for any objections which must be made at least 7 days before the hearing. This is contrary to current practice where evidence is often filed only days before convening hearings. 
3. Applicants are also required to identify where an update to the listing note is required and whether sanction may require the Court to exercise its cross-class cram down powers. If the Court is being asked to exercise its powers to cram down any creditors evidence should be submitted detailing the extent that the applicant has engaged with creditors and members, whether any objections or alternative proposals have been proposed and what information the applicant has provided to creditors and members. 
4. The Practice Statement requires that a final form explanatory statement be included in the applicant’s evidence. This change is likely to increase pressure on applicants to conclude negotiations earlier in the process to allow adequate time for preparing the explanatory statement. The Practice Statement follows the Court's guidance in Re ALL Scheme Limited [2021] EWHC 1401 (Ch) and states that explanatory statements should be concise, user-friendly, and include a short summary at the beginning. 
5. The Practice Statement enhances the Court’s case management powers, enabling it to issue directions or narrow the issues in dispute, setting procedural timetables, managing the presentation of evidence (including expert evidence), ordering disclosure or the exchange of information, and making provisions in relation to costs.
6. The Court is still able to exercise its discretion and refuse to sanction a plan if the evidence is insufficient. Judges will be expected to consider retaining conduct of cases until the end of proceedings to improve efficiency

If adhered to, the changes have been designed to allow the Court to dispose of contentious issues at the convening hearing and give appropriate case management directions. 

Impact of the changes

The proposed changes are designed to address concerns about the pressure Plan cases put on court resources. The expectation is that the changes will modernise the management of applications and bring increased efficiency and fairness to the process. Although the revisions may front load work for Applicants, they should avoid delays and drawn-out proceedings in the longer term. The changes proposed by the Practice Statement are in line with the Judiciary's recent guidance after a of recent high-profile Plans, and should result in more efficient and consistent restructuring decisions.