The recent use of an English restructuring plan under Part 26A of the UK Companies Act 2006 (RP) by the US-based and publicly listed FossilFossil (UK) Global Services Ltd [2025] EWHC 3058 (Ch). and New Fortress EnergyNFE Global Holdings Limited [2026] EWHC 1620 (Ch). groups has received attention in the US market, although the use of an English compromise process for non-English companies and of US governed debt is familiar to the European market.
The English RP offers on its face an attractive “good” forum-shopping toolAn expression coined by Newey J in Codere Finance (UK) Limited [2015] EWHC 3778 (Ch), in which the English court sanctioned a scheme of arrangement proposed by a newly-incorporated English subsidiary of its Spanish parent that had assumed a primary, joint and several obligation of the group’s New York law-governed notes. for US debtor groups seeking to compromise a subset of their liability stack to avoid a Chapter 11 filing. However, the extent of its utility will depend on the circumstances of the US debtor group, the terms of its existing debt documentation, and (potentially) the level of creditor opposition to its proposals.
This Client Alert explains some of the key considerations for a US debtor group to consider when assessing whether an English RP can be used to restructure US-law debt.
The English RP, brought into law in 2020, followed the basic premise of an English scheme of arrangement under Part 26 of the UK Companies Act 2006, pursuant to which a debtor company can achieve a court-sanctioned compromise with its creditors or members without the approval of all creditors or members, but it also introduced a cross-class cramdown power in England and Wales for the first time. While the scope of its boundaries continues to evolve, the English RP cramdown power operates without the confines of a strict absolute priority rule and so it may allow outcomes that are unavailable under Chapter 11.
Such a US group may engage the English court’s RP jurisdiction by establishing sufficient connection to England and Wales. There may already be a connection, most commonly because there is an existing English obligor in the structure or debt governed by English law. If there is no existing connection, then a debtor group can create one by changing the governing law of its debt to English law on a consensual basis, or incorporating a new English co-obligor to assume existing obligations (as in Fossil and New Fortress Energy).
If the relevant US debtor group’s financing documents do not permit either the change of governing law or the incorporation of a co-obligor either without creditor consent or via a majority creditor vote, then there is no obvious route to accessing the English court’s jurisdiction.
If such a change is effected, the English courts will accept jurisdiction for an English RP that proposes to restructure debt governed by the laws of any jurisdiction and release third parties, as long as it is satisfied that there is utility in doing so — in short, that the effect of its order will be recognised in other relevant jurisdictions. Where the obligor group is US-based and/or the governing law of the financing documents is US, the question is whether the English RP will be recognised by the US Bankruptcy Court, particularly if there is a dissenting creditor class and the English court has exercised its cross-class cramdown power.
There is a long and clear history of US courts recognising and enforcing the restructuring of US law-governed debt, for example, through English schemes of arrangement by co-obligors incorporated in England. This is on the basis that the co-obligor’s COMI will be in England (the address of its registered office absent contrary evidence) for the purposes of obtaining recognition as a foreign main proceeding under Chapter 15.
Based on recent cases, the US Bankruptcy Court is similarly prepared to grant Chapter 15 recognition of English RPs for English co-obligors, even when they contain features that may not be permitted under Chapter 11, such as non-consensual third-party releases or a departure from the absolute priority rule (existing shareholders retained some of the post-restructuring equity in both Fossil and New Fortress Energy).
The US Bankruptcy Court has shown that it is also prepared to recognise English RPs obtained by English co-obligors that have been created solely for the purpose of engaging the English court’s jurisdiction. In these cases, the new English companies have accepted liability for US law-governed debt only for the purpose of restructuring it shortly afterwards.
This willingness to accept “good” forum shopping demonstrates that English RPs provide a real opportunity for US groups to restructure debt and release guarantees across large groups, avoid a pre-packaged Chapter 11 that may be unnecessarily burdensome or have unintended consequences, or, as in Fossil, where there is significant doubt that the votes of a majority in number of noteholders can be secured to approve a plan.
However, the US Bankruptcy Court suggested in Mega NewcoCase No. 24-12031 (MEW) (Bankr. S.D.N.Y. Feb. 24, 2025). (in which a Mexican company with New York law governed debt incorporated a new English subsidiary as a co-obligor) that there are “significant risks” with the structure and was required to consider whether it amounted to an “improper manipulation of COMI”. Judge Wiles noted that he could not find it improper for Mega Newco to incorporate a new English company solely for the purpose of accessing an English RP because there was no evidence before him that the COMI was not in England, and it did not defy creditor expectations to deliver a restructuring that enhanced recoveries and preserved value in the business facing the alternative either of a Mexican or a Chapter 11 filing. In short, using the English jurisdiction in that case was not abusive forum shopping that might be detrimental to creditors’ interests.
However, Judge Wiles noted that the position may well be different were there a contention or evidence that a debtor had used the structure to “try to manipulate its COMI…to thwart creditor expectations or to accomplish other improper objectives”.These comments echo similar concerns expressed by Newey J in Codere Finance (UK) Limited in his description of “undesirable” forum shopping, citing by way of example a debtor seeking to move its COMI with a view to taking advantage of a more favourable bankruptcy regime to evade debts.
The US Bankruptcy Court has not yet been asked to recognise a contested cramdown under an English RP. Fossil was a single-class RP that compromised the affected debt tranche alone; the New Fortress Energy RP received almost unanimous support across its multiple affected creditor classes. The McDermott RP required a technical cramdown but the US Bankruptcy Court was content to recognise the combined effect of the English RP and the Dutch WHOA.CB&I UK Ltd., Case No. 23-90795, (Bankr. S.D. Texas, Houston Div. March 22, 2024). A Dutch WHOA (Wet homologatie onderhands akkoord) is a court-approved restructuring plan by which a debtor can cram down dissenting creditors and shareholders with the approval of the majority of the affected creditors or shareholders. Each of these cases was unopposed in the US (McDermott having settled in the Netherlands) and so the US Bankruptcy Court saw no basis to refuse to recognise the English RP.
The US Bankruptcy Court indicated in Mega Newco that if objections are raised by affected creditors then it would need to consider carefully the COMI of the new English company with an English RP. Although COMI is an international concept (used in the UNCITRAL Model Law on Cross-Border Insolvency, the EU Insolvency Regulation, and English law), the term is not necessarily interpreted in the same way in each jurisdiction. The US Bankruptcy Court may therefore be persuaded by facts and circumstances that may not be seen as determinative in other jurisdictions.
For example, there may well be questions about COMI being in England where the company has undertaken no activity other than the restructuring of debt (that may still be governed by US law). Similarly, the US Bankruptcy Court will be expected to carry out in-depth analysis to assess whether the use of an English RP does not protect “the reasonable interests of parties in interest pursuant to fair procedures and the maximization of the debtor’s value”, or is otherwise unfair or contrary to public policy.
Accordingly, before taking advantage of an English RP, a US debtor group should consider carefully how it would be able to demonstrate both the genuineness of its English COMI and the increased benefit to all creditors as a result of the English RP. Failure to do so will risk an English RP being unable to achieve its purpose in the US.
An English RP is a powerful tool to effect restructurings of US law-governed debt held by US groups, giving access to flexibility and broad releases that may not be available under a Chapter 11 process.
However, it is not a panacea for all situations and will not always be an appropriate tool for a US debtor group: it lacks an automatic stay, offers no capacity for DIP financing, and does not permit the acceptance and rejection of executory contracts. However, facing the alternative of either unanimous noteholder consent under the Trustee Indenture Act to amend core “payment terms” or a Chapter 11 filing, a US debtor with New York law-governed notes may consider an English RP an appropriate and proportionate tool for “surgical” amendments to a subset of its financial liabilities.
If the English RP requires the cramdown of a dissenting creditor class that continues its opposition in the Chapter 15 case, the US Bankruptcy Court will give careful consideration to all the circumstances surrounding and effect of the restructuring through a public policy lens in deciding whether to grant Chapter 15 recognition. Potential challenges should therefore be anticipated and addressed early in the process to avoid wasted costs of starting on a process that turns out to be unenforceable in the US.