Waldorf's second bite at the cherry: Takeaways from Waldorf Production UK plc's latest sanction hearing

The High Court’s decision in Waldorf is an important case in the restructuring world as it is one of the first contested sanction hearings since the high-profile trio of decisions in Thames Water, Adler and Petrofac, and the first example of the Court using its cross-class cram down powers against HMRC since those decisions. 

The plan is also the first UK restructuring plan in which the plan company used mediation to negotiate with dissenting creditors. The company used mediation before the sanction hearing to negotiate with an unsecured creditor, Capricorn, and their objections were successfully resolved via that mediation process. HMRC, however, declined to participate in the mediation. 

In May 2026, the High Court sanctioned Waldorf’s second contested restructuring plan despite opposition from HMRC, the only dissenting creditor class. The plan was tied to a $205 million sale of most of the Waldorf group to Harbour Energy following the refusal from the Court to sanction the previous restructuring plan proposed by Waldorf in August 2025.

The decision focuses mainly on the arguments raised by HMRC, which in summary included:

1. HMRC's Special Status - in what appears to be a shift in policy, for the first time HMRC expressly stated that its position is that its constitutional mandate to collect taxes precluded the court from overriding its rational dissent.
2. No Worse Off Test - the considerable tax losses within the Waldorf group, which were an asset that Harbour wished to acquire and use to protect its profits from certain tax liabilities, should be taken into account for the purposes of the “no worse off” test.
3. Fairness - HMRC said the plan was unfair and an abuse because Harbour would obtain the benefit of those tax losses while HMRC accepted only 14 cents in the dollar on its claim.

The court rejected each of those arguments. It confirmed there is no special jurisdictional carve-out for HMRC under Part 26A or in relation to the Court exercising its cross-class cram down power against HRMC. It also held that the no worse off test comparison focuses on the rights being compromised by the plan, not wider fiscal effects. On that footing, Harbour’s future use of tax losses did not fall within the statutory test. In any event, the evidence showed HMRC was still better off under the plan than in the relevant alternative.

In addition to the Court's comments and decisions regarding the treatment of HMRC, the judgment also provides useful guidance on:

1. the critical importance of genuine negotiation with all stakeholders, highlighted by the novel use of mediation to successfully negotiate with one opposing creditor.
2. the need to demonstrate substantive fairness in the allocation of consideration.
3. The Court's willingness to recognise considerations of commercial pragmatism in the exercise of its discretion.

Conclusion

The Waldorf decision offers clarity regarding the Court's attitude towards when and how HMRC can be crammed down, that the relevant alternative remains central to the analysis, and that courts will focus closely on what unsecured creditors would actually recover in the real-world alternative. 

The Court refused HMRC permission to appeal the judgment. HMRC has, however, applied directly to the Court of Appeal for permission to appeal, and it is anticipated that any such appeal would most likely be heard directly by the Supreme Court.