Poundstretcher Limited, Re

A restructuring plan under Part 26A of the Companies Act 2006 may be sanctioned despite dissent by creditor classes where the statutory conditions are met and the court’s discretion is exercised fairly. The court must identify the relevant alternative, compare the dissenting creditors’ existing rights with their rights under the plan, and ensure that no member is worse off. It must also identify the classes with a genuine economic interest in the relevant alternative. The wider fairness assessment requires a horizontal comparison of creditor treatment and a fair allocation of the value preserved or generated by the restructuring. New money provided on market terms is ordinarily a cost of the restructuring, while any excess return may be a restructuring benefit requiring justification. The court must scrutinise the plan particularly carefully where landlords are crammed down and should not act in vain where foreign-law rights are affected.

Following class meetings held on 26 May 2026, Poundstretcher Limited sought sanction of a restructuring plan under Part 26A of the Companies Act 2006. The plan restructured secured and unsecured debt, compromised business-rates liabilities, and varied or released liabilities under a substantial portfolio of commercial leases.

Eight creditor classes approved the plan and six landlord-related classes did not. The Plan Company sought cross-class cramdown. The principal issues were whether the statutory and procedural requirements had been met, whether dissenting creditors would be worse off than in the likely alternative of administration, whether an assenting class had a genuine economic interest in that alternative, whether the allocation of restructuring benefits was fair, whether guarantees given by the parent company should be released, and whether the plan would have substantial effect in Scotland and Northern Ireland.

1. The plan was sanctioned. The court was satisfied that the 14 classes had been properly constituted, the convening order had been complied with, creditors had received sufficient information to make an informed decision, and the plan contained no blot or defect preventing sanction.
2. For assenting classes, the ordinary scheme principles applied. The court considered statutory compliance, fair representation, whether the majority was coercing the minority, whether the plan was one an intelligent and honest member of the class might reasonably approve, and whether there was any operative defect. Those requirements were satisfied.
3. For the dissenting classes, the court applied the three questions identified in Re Virgin Active Holdings: whether Condition A was satisfied, whether Condition B was satisfied, and whether the court should exercise its general discretion. The relevant alternative was an insolvent administration of Poundstretcher Limited and its parent, PLL. The evidence showed higher estimated recoveries under the plan for every dissenting class, and the court found that the parent guarantees had no material value in that alternative. Condition A was therefore met.
4. Condition B was met because the ABL Lender and SLA Lender had approved the plan and would receive payment or have a genuine economic interest in the relevant alternative.
5. The general discretion required more than the limited rationality test applicable within an assenting class. Following Re AGPS BondCo (Adler), Re Thames Water Utilities Holdings and Saipem S.p.A v Petrofac Ltd, the court examined differences in treatment between creditor classes and whether the restructuring surplus was fairly allocated. The lease classifications had an established and rational basis, landlords retained termination rights, and the different treatment of secured, landlord, business-rates and other creditors was justified by their respective positions and contributions.
6. The court accepted that new money provided on competitive market terms is ordinarily a cost of the restructuring. A return materially above market terms may instead be a benefit requiring fair-allocation justification. The evidence supported the treatment of the shareholder funding and the retention of the existing equity.
7. The proposed release of the parent guarantees was justified because the parent was within the group, held the principal equity asset, and was integral to the post-restructuring capital structure. The suggested alternative amendment would not adequately prevent ricochet claims or protect the restructuring.
8. The court accepted expert evidence that the plan had a real prospect of substantial effect in Scotland and Northern Ireland. Despite reservations about the detail of the turnaround plan, the court found a realistic prospect of achieving its objectives and made the sanction order.

This was a first-instance sanction application. The court referred to its earlier convening judgment, [2026] EWHC 1321 (Ch), and sanctioned the plan after the creditor meetings.