The Role of Court's Discretion in Restructuring Plans

The English courts hold significant discretion when sanctioning restructuring plans under Part 26A of the Companies Act 2006, particularly in their ability to exercise cross-class cram down powers. Cram down allows courts to impose a restructuring plan on dissenting creditors if they believe a fair commercial bargain has not been reached, which emphasizes the need for the company to demonstrate that it has attempted bargaining. Past cases, such as Fitness First, illustrate that judges have noted a lack of prior engagement with certain creditors and questioned whether there should be evidence of such engagement before proceeding with cram down. The importance of demonstrating a genuine negotiation process highlights the balance courts must maintain between facilitating efficient restructurings and ensuring dissenting creditors are adequately considered.