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An article for directors of small and medium-sized enterprises (SMEs), insolvency practitioners and other insolvency specialists outlining the developments in the evolution of restructuring plans in 2025 making them more accessible to SMEs.
Restructuring Plans (RPs) under Part 26A of the Companies Act 2006 have been a lifeline for financially distressed companies since their introduction through the UK's Corporate Insolvency and Governance Act 2020.
RPs enable businesses to renegotiate debts with creditors and shareholders and offer a court-approved mechanism to avoid formal insolvency. However, to date, for many SMEs the perceived costs and complexities of RPs have made them a less attractive option.
Traditionally, the formalities of RPs – court appearances, negotiations and extensive documentation – have been seen as barriers, pushing SMEs towards more familiar options like internal restructuring or insolvency. However, recent developments suggest a shift in the RP landscape, making them increasingly accessible to SMEs.
What's Changing?
1. September 2025: New Practice Statement for RPs
On 18 September 2025, the 2025 New Practice Statement (2025 Statement) in relation to RPs and Schemes of Arrangement was published, which announced an attempt to streamline Part 26 and Part 26A proceedings using active case management to resolve any issues as early and as efficiently as possible. The 2025 Statement revised the previous June 2020 version, which was put in place during the Covid-19 pandemic.
The 2025 Statement introduced a number of new requirements, including:
- a 'listing note' to accompany the Claim Form, to assist the Court with listing the hearing and shortening the timeline of proceedings;
- an expansion on what must be covered in the company's evidence; and
- the requirement for objecting creditors to identify the nature of their objections at least 7 days before the hearing.
A detailed breakdown of the changes can be found linked here.
2. Streamlined Processes for SMEs
While a Practice Statement Letter is considered best practice in RP proceedings, it is not a formal requirement in England and Wales. For SMEs with straightforward plans and limited creditors and stakeholders, skipping this step could save both time and costs. Simple RPs may now be able to achieve court sanction within as little as four weeks.
3. HMRC's New Approach
HMRC, a key creditor for many businesses, has adopted a more supportive stance towards RPs. Rather than simply voting in favour, HMRC now actively participates in court proceedings to support RP sanctions.
This year alone, HMRC's involvement has been pivotal:
- Re Enzen Global: HMRC supported the RP of a mid-market company, even voting in favour despite being impaired on its preferential claim.
- OutsideClinic Limited: HMRC appeared in court twice to support this SME's RP, helping to resolve questions surrounding its treatment.
What Does This Mean for SMEs?
These developments signal a growing opportunity for smaller enterprises to leverage RPs as a viable and cost-effective restructuring mechanism. HMRC's willingness to engage with RPs, coupled with the ability to streamline more straightforward RPs, could remove key barriers for SMEs.
The Road Ahead
As the RP framework evolves, it may pave the way for businesses of all sizes to address financial distress and explore recovery options. With the courts and HMRC showing increased support, RPs could soon become a solution for SMEs navigating turbulent financial waters.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
