Vol 19 (2022) - Issue 1

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Restructuring Plans in the Eye of the Hurricane: The ‘No Worse Off ’ Test and the Application of the Cramdown Tool in the Aftermath of Re Hurricane Energy Plc

Synopsis Re Hurricane Energy Plc represents the first case in England, where the High Court refused to sanction a Restructuring Plan on the basis that one of the conditions for the application of the newly introduced cramdown tool was not met. In particular, the court found that the plan proponent had not managed to establish that the dissenting shareholder class was "no worse off" than in the relevant alternative, since there was a realistic possibility that shareholders might in fact obtain a higher return, if the company were allowed to continue to trade. This ruling exposes the inherent difficulty in applying the newly introduced cramdown option in cases, where the debtor is not yet facing an imminent insolvency risk, and is likely to continue to operate, even if the plan is not sanctioned. In the aftermath of Hurricane Energy, debtors are likely to consider alternative strategies in order to achieve a preventive restructuring of their business.