Waldorf Production UK plc, Re

Permission to appeal against the exercise of discretion on a Part 26A restructuring plan will generally be refused where the proposed grounds merely challenge the weight given to relevant factors. An appellate court is concerned with legal error, reliance on irrelevant matters, failure to consider relevant matters, or a conclusion no reasonable judge could reach.

The statutory no-worse-off condition is distinct from the court’s broader fairness discretion. Satisfaction of the condition does not give the plan company a favourable presumption on fairness. Tax losses and an ongoing relationship with HMRC may be relevant to fairness, but must be evaluated alongside the interests of all plan creditors.

HMRC applied for permission to appeal from the order sanctioning Waldorf Production UK plc’s Part 26A restructuring plan. The substantive judgment, reported at [2026] EWHC 1014 (Ch), rejected HMRC’s objections concerning tax losses, HMRC’s position as an involuntary creditor, the continuing relationship between HMRC and the plan company, the contingent payment proposal, and the weight given to the commercial agreement with other creditors.

HMRC advanced five proposed grounds, principally challenging the fairness assessment and the treatment of the statutory no-worse-off condition. The issue was whether any ground disclosed a real prospect of success or a compelling other reason for an appeal.

1. Permission refused. None of HMRC’s five grounds disclosed a real prospect of successfully appealing the sanction decision. The proposed grounds principally attacked the evaluative weight given to relevant factors. Such an appeal would not ordinarily succeed unless the judge applied the law incorrectly, took account of an irrelevant matter, failed to consider a relevant matter, or reached a conclusion no reasonable judge could have reached.

2. The statutory no-worse-off test under Condition A in section 901G(3) of the Companies Act 2006 was distinct from the wider discretionary assessment of fairness. Satisfaction of Condition A did not give the plan company a favourable presumption on fairness. Tax losses could not be included in the statutory calculation, but remained relevant to discretion.

3. The fairness assessment properly considered the likely utilisation of tax losses, the consequences of liquidation, HMRC’s continuing relationship with the plan company, and the interests of all plan creditors. Parliament had not given HMRC a special statutory status in relation to such plans or company voluntary arrangements.

4. The contingent payment proposal was a risky renegotiation which was unlikely to produce a better outcome and threatened the only available commercial deal. The judge was entitled to conclude that pursuing it would prejudice the other creditors.

5. The different outcome in RP1 concerned a different plan and different objections. The developing nature of the law and public importance of other restructuring-plan litigation did not provide a compelling other reason for an appeal in this case. HMRC could not use the appeal process to reargue the discretionary balancing exercise.

• High Court (Insolvency and Companies List): the substantive plan-sanction decision is reported at [2026] EWHC 1014 (Ch).
• High Court (Insolvency and Companies List): permission to appeal was refused on all five grounds.