• insights-banner

    In the Press

Melania Constable writes for Property Week on restructuring in the property sector

Melania Constable, Senior Associate, writes for Property Week on restructuring in the property sector. Read the full article below, first published in Property Week.

On 22 July, the High Court sanctioned the part 26A restructuring plan (RP) of Houst, a property management services business for short-term and holiday lets.

The part 26A RP introduced in the UK by the Corporate Insolvency and Governance Act 2020 (CIGA2020) suffered a slow start and has been used to date primarily by large corporates (such as Virgin Active) due to perceived excessive costs.

To implement an RP, a company has to obtain consent from the requisite 75% in value of each class of creditor. However, one of the key features of an RP is the court’s ability to sanction plans where there has been a class (or classes) where that 75% approval threshold has not been met (known as cross-class cram-down).

To exercise the cross-class cram-down power, the court must be satisfied that a number of conditions have been met including, notably, that the members of the dissenting class would be no worse off under the RP than in the event of the relevant alternative.

In Houst’s case, at the creditors’ meetings, the plan was approved by the requisite majority of all classes except HMRC – a secondary preferential creditor, which voted against it.

The evidence presented to the court showed that all creditors, including HMRC, would be better off under the RP, and the judge was therefore prepared to exercise his discretion to sanction it. Notably, in Houst’s case, it was estimated HMRC would receive 15p in the pound in the alternative outcome (a pre-pack administration) versus 20p through the RP. General unsecured creditors would likely receive nothing in a pre-pack scenario versus 5p through the plan.

It is anticipated this judgment may open the gates to further uptake of RPs in the property sector. For example, R3 Association of Business Recovery Professionals is reported to be in the course of preparing an RP precedent for SMEs, which could streamline the procedure and make it more cost effective for smaller and medium-sized businesses to utilise the RP procedure.

The full article was first published in Property Week (subscription required). 

Our thinking

  • Alumni Drinks Reception

    Events

  • Women in Leadership: Prima Facie

    Events

  • Retail Showcase 2025

    Events

  • Token2049 week - what's on the horizon?

    Racheal Muldoon

    Quick Reads

  • My “15 Minutes of fame”, Eddie Redmayne and The Theory of Everything...

    Charlotte Posnansky

    Quick Reads

  • Anti-Bribery & Corruption United Arab Emirates

    Sara Sheffield

    Insights

  • PISCES – HMRC release technical note on the interaction of PISCES on share schemes and incentives

    Tim Edgar

    Insights

  • Computing quotes Gareth Mills on a major antitrust case involving Google

    Gareth Mills

    In the Press

  • Michael O'Connor and Lauren Fraser write for Property Week on the impact of the Building Safety Act on residential property management

    Michael O'Connor

    In the Press

  • Martyn’s Law receives Royal Assent – what do property owners and occupiers need to do now?

    Ben Butterworth

    Quick Reads

  • From Double Helix to the Courtroom – A Look Down The Microscope into DNA Testing in Family Law

    James Elliott-Hughes

    Insights

  • The path to paradise or the road to ruin? The Pathfinder pilot in Children Act cases

    Ben Haynes

    Quick Reads

  • Can Labour deliver 1.5m new homes?

    David Savage

    Insights

  • Setting Standards: The Ciarb Guideline on AI Use in Arbitration

    Dalal Alhouti

    Insights

  • Risky Business: Lessons in clearing up Contractual Confusion in John Sisk and Son Ltd v Capital & Centric (Rose) Ltd

    Murron McKeiver

    Insights

  • TCC decision on validity of payment and payless notices served simultaneously

    Johnathon Grasso

    Insights

  • Investors' Chronicle quotes Natalie Butler on how to pass on your digital assets

    Natalie Butler

    In the Press

  • Charles Russell Speechlys advises long standing client Puma Growth Partners on its investment in LOVE CORN

    Ashwin Pillay

    News

  • Startups Magazine quotes Daniel Rosenberg on the use of AI and technology in M&A

    Daniel Rosenberg

    In the Press

  • Relocation to Portugal: The Portuguese Tax Incentive Regime for Scientific Research and Innovation (NHR 2.0)

    Julia Mauricio

    Quick Reads

Back to top