Five years ago, the key question surrounding the UK’s restructuring plan regime was relatively straightforward: would the new powers introduced under Part 26A of the Companies Act become a meaningful rescue tool or simply remain an option reserved for exceptional circumstances?
The question seems to have been answered conclusively. The courts have repeatedly been willing to approve restructuring plans and, where appropriate, impose them on dissenting creditor groups through the use of cross-class cramdowns. What was once seen as a novel restructuring mechanism has become firmly established in the UK’s corporate rescue toolkit.
The more interesting question in 2026 is whether the pendulum has started to swing too far. It’s arisen during the proposed restructuring of TG Jones, the retailer formerly known as WHSmith’s high street business.
Under plans put forward by owner Modella Capital, the retailer is seeking significant rent reductions across its estate, alongside store closures and other restructuring measures designed to stabilise the business. Possibly most controversial are proposals for three-year rent holidays on some stores and substantial rent reductions on others.
The case has attracted considerable attention from landlords, investors and restructuring professionals, not simply because of the scale of the proposals, but because of what it may say about the future direction of the UK’s restructuring framework.
In many respects, TG Jones represents the latest chapter in a trend that has been developing for several years. Since the introduction of Part 26A plans, businesses have increasingly used the process to address financial difficulties while avoiding formal insolvency.
The attraction is obvious. Companies can restructure debts, compromise liabilities and preserve value without necessarily entering administration or liquidation.
For creditors, however, the picture is more complicated. A significant feature of the regime is the ability of the court to sanction a plan even when one or more classes of creditors vote against it. Provided certain legal tests are met, dissenting creditors can find themselves bound by an arrangement they actively opposed.
When these powers were introduced, there was understandable concern about their frequency of use. Yet successive court decisions have supported restructurings where judges conclude that creditors are likely to be better off than they would be under the relevant alternative, usually administration or liquidation.
The issue, particularly for landlords, is now where the boundaries lie. Retailers, leisure operators and hospitality businesses frequently view rental costs as one of the most obvious areas for savings, making landlords a recurring target for compromise proposals.
From a business rescue perspective, this is easy to understand. If reducing rental liabilities allows a viable business to survive, preserve jobs and continue trading, there is a strong public policy argument in favour of facilitating that outcome.
However, landlords argue that there must be limits. Commercial leases are long-term contractual commitments that underpin investment decisions and asset valuations. If restructuring plans repeatedly require property owners to absorb substantial losses while other stakeholders retain value or control, questions inevitably arise about whether the burden is being shared fairly.
That concept of fairness is increasingly emerging as the key battleground in restructuring cases. Recent legal commentary has suggested that courts are paying closer attention not only to whether creditors satisfy the statutory “no worse off” test, but also to how restructuring benefits and sacrifices are distributed across different stakeholder groups.
In practical terms, that means judges are scrutinising valuation evidence, projected recoveries and the overall allocation of value more closely than ever before. The focus is increasingly shifting from what is legally permissible to what is equitable in the circumstances.
The TG Jones case may therefore prove significant not because it introduces a new legal principle, but because it provides another opportunity for the courts to clarify where they believe the balance should sit.
The challenge facing the courts is that both sides of the argument have merit. A restructuring regime that is too restrictive risks pushing otherwise viable businesses into insolvency. Equally, a regime that permits ever more aggressive compromises risks undermining confidence among creditors who may feel they are being asked to shoulder a disproportionate share of the pain.
The wider economic backdrop only reinforces the debate. Many consumer-facing businesses continue to face rising operating costs, changing customer behaviour and pressure on margins.
As a result, restructuring activity is unlikely to disappear any time soon. If anything, the coming years may see further use of restructuring plans as businesses seek to adapt to challenging trading conditions.
Against that backdrop, the outcome of TG Jones will be watched closely across the restructuring community as the courts continue to define the boundary between effective business rescue and the fair treatment of creditors.
This article is written by Toby Horne, analyst at Buchler Phillips, an independent boutique firm, with an impeccable Mayfair London heritage, specialising in corporate recovery, turnaround, restructuring and insolvency.