High Court refuses to sanction restructuring plan seeking to compromise HMRC debt (In re Nasmyth Group Ltd)

Article summary

Restructuring & Insolvency analysis: In this recent decision, Mr Justice Leech declined to sanction a restructuring plan proposed by Nasmyth Group Ltd (the Company) under Part 26A of the Companies Act 2006 (CA 2006). HMRC, an out of the money creditor, had voted against the adoption of the plan and opposed its sanction. The court declined to sanction the plan even though the two conditions contained in CA 2006, s 901G had been met. The court accepted that HMRC would be no worse off under the plan than in the relevant alternative. It was also accepted that the proposed compromise had been approved by classes of creditors with a genuine economic interest in the Company in the relevant alternative. Nevertheless, there is no presumption in favour of sanction if the two conditions are met, and the court declined to exercise its discretion to cram down HMRC in this case. Written by Yasseen Gailani,...