Waldorf—the dangers of ignoring out of the money creditors in restructuring plans (Re Waldorf)
Restructuring & Insolvency analysis: Re Waldorf concerned the court sanction of a restructuring plan (the Plan) put forward by Waldorf Production UK Plc (the Company), which was refused. Mr Justice Hildyard’s judgment, having considered the three Court of Appeal judgments on restructuring plans (Re AGPS BondCo Plc, Re Thames Water and Re Petrofac), reiterated and clarified guidance laid down by the Court of Appeal and which will have a wider impact on the structuring of restructuring plans. He found that the Plan was unfair because the proposed 5% return for out of the money creditors did not fairly and reasonably allocate the benefits of the restructuring having regard to amounts contributed by each creditor class. The lack of engagement by the Company with its out of the money creditors was not fatal but negatively impacted the Company’s ability to demonstrate that the Plan was fair. Written by Alex Harford, associate at Allen Overy Shearman Sterling LLP.