Waldorf Case Study: Part 26A Refusal Appealed; Supreme Court Leapfrog Granted; Scheme Launched

Oil and gas company Waldorf Production UK’s proposed Part 26A restructuring plan, or Plan, has quickly become one of the most closely watched cases in the post-Adler landscape. It combines a disputed cross-class cramdown, a rare outright refusal of sanction and now a leapfrog appeal straight to the U.K. Supreme Court has been granted.

What began in early 2025 as an urgent attempt to stabilize liquidity and compromise more than $100 million of the group’s unsecured liabilities has developed into a test case on the limits of Part 26A fairness, creditor engagement and the proper interpretation of the “trilogy” of Court of Appeal decisions in Adler, Thames Water and Petrofac.

This analysis sets out the timeline and where the process now stands, following the High Court’s refusal to sanction the original plan, the granting of a leapfrog permission to appeal to the Supreme Court directly and the company’s launch of a parallel bond scheme.

We highlight the key legal and commercial issues that will shape the Supreme Court appeal scheduled for Feb. 24 to 25, 2026. Further, we summarize the timeline so far, the structure of the proposed plan, the challenges advanced by creditors – HMRC and Capricorn – and the High Court’s reasons for declining to sanction. We also examine the implications of Waldorf’s appeal for future cross-class cramdowns.
 

February 2025
 

• Plan launched with bondholder support – On Feb. 5, WPUK signed a lock-up with its bondholder steering committee and immediately launched an English law Part 26A restructuring plan. A parallel Scottish Part 26A was planned but later fell away.
• Unsecured creditors (HMRC and Capricorn) were not engaged before launch according to filings.

March 2025
 

• Convening hearing held – On March 5, the High Court convened two classes: bondholders, and unsecured creditors (HMRC + Capricorn).
• The plan proceeded to meetings.

May, June 2025
 

• Unsecured creditors make alternative offers – In May and June, HMRC and Capricorn made open offers proposing higher recoveries and an independent investigation.
• WPUK did not accept these offers, proceeding with its own Plan.

June 12, 2025
 

• Plan meetings produce split votes – Bondholders voted 100% in favour. Unsecured creditors voted 100% against.
• The company sought cross-class cramdown under section 901G to push the Plan through.

June 23-24, 2025
 

• Two-day sanction hearing takes place – The court heard evidence from WPUK, the bondholder SteerCo, HMRC and Capricorn.
• Issues raised included negotiation failures, the small 5% unsecured recovery, a July 2024 refinancing and the 2022 dividend paid by the group.

August 2025
 

• High Court refuses to sanction the Plan – The Court refused sanction, finding the plan unfair to unsecured creditors.
• Costs were reserved; unsecured creditors later claimed their costs of the proceedings.

Late 2025
 

• Leapfrog appeal and bond scheme launched – WPUK applied for, and received, a leapfrog certificate to appeal directly to the Supreme Court, bypassing the Court of Appeal.
• WPUK launched a bond scheme of arrangement in parallel and amended its lock-up with majority bondholder support. The terms of the scheme are not yet public.

Feb. 24-25, 2026
 

• Supreme Court appeal scheduled – The U.K. Supreme Court has listed the appeal against the refusal to sanction for Feb. 24 to 25, 2026.
• WPUK continues to pursue the appeal while progressing the bond scheme.

 

Waldorf’s Part 26A restructuring plan sought to address the company’s deteriorating liquidity position following the introduction and escalation of the Energy Profits Levy, or EPL, the withdrawal of critical receivables financing and the accumulation of more than $100 million in unsecured liabilities owed to HMRC and Capricorn.

The plan aimed to create a stable platform from which the business could continue trading while pursuing a solvent sale of the company itself, which was considered commercially preferable to an asset-by-asset disposal given the tax and regulatory complexities of North Sea licences.

To achieve this, the plan proposed to extend the maturity of Waldorf’s secured bonds by two years, amend certain covenant terms and maintain the existing security package in favor of bondholders. In parallel, the plan sought to compromise the unsecured creditor claims (principally EPL tax liabilities and the M&A settlement amounts) by offering a 5% cash payment in full and final settlement. This compromise was presented as necessary to restore the company to a position where it had positive equity value and could be marketed and sold, with any upside from such a sale flowing first to the bondholders as the in-the-money class.

In effect, the Part 26A plan attempted to preserve going-concern value, avoid a value-destructive formal insolvency process, and provide a mechanism through which the company’s secured creditors could recover materially more than in the relevant alternative. At the same time, the plan provided unsecured creditors with an immediate cash recovery (albeit at a steep discount of 95%) designed to reflect their out-of-the-money position in an insolvency while delivering a cleaner balance sheet that would facilitate a solvent sale process.
 

Capricorn and HMRC’s main objections to the plan being sanctioned by the court were as follows:
 

Capricorn Objections to Sanction

HMRC Objections to Sanction

• The court should not exercise its discretion to sanction the plan on the basis that (i) a failure to negotiate with unsecured creditors, (ii) The 5% recovery for unsecured creditors is not objectively justified, and (iii) the 5% figure is insufficient compensation for the contribution made by the unsecured creditors towards the restructuring surplus, notwithstanding that they are out of the money as per Thames Water. • The No Worse Off Test is not satisfied because the relevant alternative is not an insolvency but a different restructuring under which it receives more.

• The relevant alternative is not a “terminal insolvency” as identified by the plan company. • The No Worse Off Test is not satisfied. HMRC has issued two open offers with Capricorn, which, if accepted, would put them in a better position than under the plan. • The court should decline to sanction the plan because it is: (a) unfair; and/or (b) unfair to HMRC, in view of its critical public function as the collector of taxes. • The proposed restructuring Plan is an abuse of the process of the court. HMRC says the plan is not urgent (since any liquidity shortfall is self-inflicted), not actually required (given that the plan could be achieved consensually) and will “whitewash” the company’s decision to declare and pay a $76 million dividend in 2022 and enter into the ‘July 2024 Refinancing’ which increased the amounts owed to bondholders by $56 million to $108 million. HMRC wants the transactions investigated by an independent officeholder. • HMRC also argues that if Waldorf has an actual liquidity shortfall, then this was caused by, or was a foreseeable consequence of, the July Refinancing or the payment of the 2022 Dividend.

 

The High Court found that Waldorf had made no attempt to identify a fair allocation of the value created by the restructuring, noting that engagement with HMRC and Capricorn could have provided the court with evidence of what an appropriate distribution might have looked like. Instead, the company advanced a 5% offer to unsecured creditors without any supporting analysis or financial evidence demonstrating that it could not afford to pay more. In the Court’s view, the 5% figure appeared arbitrary, despite being materially higher than the return available in the relevant alternative accepted by the Court.

The judgment reiterated that the burden of establishing fairness rests squarely on the plan company. While rejecting proposals from out-of-the-money creditors may be sufficient to meet the jurisdictional threshold for cross-class cramdown, it can simultaneously create an evidential vacuum on fairness. Where a plan company does not negotiate, does not test creditor proposals and does not justify its own allocation methodology, it risks leaving the Court without the evidential basis needed to exercise its discretion in favor of a cramdown.

In Waldorf, several additional factors weighed heavily against sanction. These included the payment of an “enormous” and seemingly unjustified $76 million interim dividend in October 2022, a deliberate decision not to pay tax owed to HMRC, the fact that HMRC was an involuntary creditor and the observation that the company’s legal fees exceeded the gap between the unsecured creditors’ rejected offer and the 5% offered under the plan.

Taken together, these factors led the Court to conclude that Waldorf had not discharged its burden of proving that the plan was fair, and the application for sanction was refused.
 

The U.K oil and gas group sought to appeal the sanction decline on the basis that the “trilogy” of Court of Appeal decisions in restructuring plan cases (Adler, Thames Water and Petrofac) are fundamentally wrong and that the decision to refuse to sanction Waldorf’s plan, which was informed by those cases, was also wrong.

In particular, Waldorf believes that the rejection of prior case law from Virgin Active – i.e., that the views of dissenting out-of-the-money creditors carried little or no weight, and de minimis payments were permissible as long as they offered more than under the relevant alternative – is incorrect.

Giving judgment, Justice Hildyard wrote:

“So far as I am aware, the Court of Appeal has not considered it appropriate to grant permission to appeal to the Supreme Court in any of the cases in the trilogy. That tells against the need for any further systemic guidance at an even higher level. Even so, and bearing in mind that the effect of the grant of a leapfrog certificate is only to enable an application for permission […] I have concluded in the round that I should grant the leapfrog certificate sought.”

The judge explained that he was fortified in his decision by Petrofac’s application for permission to appeal from the Supreme Court on much the same grounds that Waldorf intends to rely on. “It seems to me that, provided [Waldorf] and its advisers do not delay, the grant of a certificate will efficiently enable the Supreme Court to consider both applications and determine whether it wishes to hear an appeal in either or both,” he wrote.

Hildyard J was satisfied that the issue is a point of law of general public importance. The issue being: When considering the fairness of a restructuring plan as part of the court’s overall discretion to sanction a cross-class cramdown against out-of-the-money creditors is the correct reference point (i) what those creditors would be likely to receive in the relevant alternative if a plan fails as per Virgin Active?; or (ii) by reference to what those creditors, properly informed, would fairly and reasonably expect to be paid to give up their claims?
 

U.K. oil and gas group Waldorf Production UK plc has filed an English scheme of arrangement, court filings showed on Nov. 19. The details of the scheme are as yet not public.

To date, no Part 26A restructuring plan appeal has been heard by the Supreme Court. However, there is concern that uncertainty caused by the trilogy of Court of Appeal decisions is driving more companies toward out of court restructurings, as reported. Some market participants are hoping that the Supreme Court will clarify the law in this area. However, if the scheme is successful, the Supreme Court appeal is expected to fall away.
 

Part 26A restructuring plans sit alongside traditional schemes of arrangement in the English restructuring playbook but provide companies with a more flexible framework for dealing with creditor opposition. While schemes are brought under Part 26 of the Companies Act 2006, Part 26A was introduced to address structural limitations in the scheme jurisdiction, in particular the inability to bind a dissenting class. Both processes involve a court-supervised proposal put to creditor classes, but Part 26A expands the toolkit available to distressed companies.

Under both procedures, creditors are divided into voting classes based on whether their rights are sufficiently similar to consult together. In a scheme, each class must approve the proposal by a 75% (by value) and majority-in-number vote for it to become binding. If any one class votes against, the scheme fails. Part 26A departs from this structure by allowing a plan to be sanctioned even if a class votes against it, provided the statutory tests for cross-class cramdown are met. This gives the court the power to impose the plan on a dissenting group where appropriate.

To exercise that power, the court must be satisfied that no member of the dissenting class would be worse off under the plan than in the relevant alternative (typically administration or liquidation) and that at least one class with a genuine economic interest in that alternative has approved the plan. If these conditions are met, the court then undertakes a broader fairness assessment.

Part 26A has increasingly been deployed as an alternative to company voluntary arrangements, particularly in cases involving landlords and leasehold liabilities. The result is a more expansive and adaptable restructuring tool capable of reshaping both financial and operational liabilities within a single process.