Waldorf Production UK Plc, Re

Part 26A of the Companies Act 2006 permits the court to impose a restructuring plan on HMRC, even where HMRC has rationally opposed it. HMRC’s public function and involuntary-creditor status require careful scrutiny and attract substantial weight, but do not create a veto.

The statutory “no worse off” comparison concerns the value of rights compromised or released by the plan, including affected guarantees and security. Wider consequences, such as the utilisation of tax losses, fall outside that jurisdictional test but may bear on fairness. A plan may be sanctioned where it is the best available transaction, creditors have been properly engaged, the dissenting creditor is no worse off, and the allocation of restructuring benefits is fair.

The Plan Company sought sanction of a second restructuring plan under Part 26A of the Companies Act 2006. Its earlier plan had been refused sanction by Hildyard J in [2025] EWHC 2181 (Ch), and the proposed appeal to the Supreme Court was withdrawn.

The new plan implemented the sale of the relevant Waldorf group companies to a Harbour subsidiary. It compromised and extinguished the Plan Company’s liabilities to HMRC and the M&A Creditor, while distributing sale proceeds among plan creditors. The plan was approved at all creditor meetings except HMRC’s meeting. HMRC challenged jurisdiction, the no-worse-off condition, alleged abuse of process, fairness, and the relevance of the Plan Company’s past conduct. The central issues were whether HMRC could be crammed down and whether the plan should be sanctioned in the light of the tax losses acquired by Harbour.

1. Jurisdiction. The court rejected HMRC’s contention that its constitutional status, public function or rational opposition created a jurisdictional bar. Part 26A contains no legislative carve-out for HMRC. The statutory references to compromises with creditors include HMRC, and excluding it would undermine the legislative purpose and rescue culture of the regime. HMRC’s views nevertheless deserved considerable weight and the plan required especially careful scrutiny.
2. No worse off condition. Under s.901G(3) of the Companies Act 2006, the starting point is the financial value of the creditor’s existing rights against the plan company in the relevant alternative, compared with the new or modified rights given under the plan. The enquiry extends to rights against third parties where the plan compromises or releases them, such as guarantees. It does not extend to wider interests or liabilities which the plan does not compromise. Tax losses available to Harbour were therefore outside the jurisdictional comparison.
3. Alternative factual conclusion. Even if the wider effect on the Exchequer were relevant, the evidence did not establish that HMRC would be worse off. It was not reasonable to assume that Harbour would utilise all current and future tax losses at the assumed rate. On the agreed sensitivity analysis, the Exchequer would likely be better off under the plan than in the relevant alternative.
4. Fairness and abuse. The tax losses were relevant to the discretionary assessment of fairness because their preservation and potential use were closely connected with the sale and the restructuring benefits. The plan resulted from the only credible and best available transaction, followed extensive engagement with creditors, treated HMRC equally with the other unsecured creditor, and gave HMRC a better outcome than the relevant alternative. The plan was not an abuse of process. HMRC’s possible tax-loss objections could be pursued through the statutory anti-avoidance mechanisms.
5. Disposition. The court rejected all HMRC’s objections and sanctioned the plan under Part 26A, including the exercise of the cross-class cram-down power against HMRC.

This was a first-instance sanction application. The judgment records that an appeal to the Supreme Court from the refusal of the earlier restructuring plan was withdrawn on 17 December 2025.