Despite initial concerns following the Petrofac decision in 2025, the UK's Part 26A restructuring plan mechanism has demonstrated significant resilience and adaptability. This legal framework is now gaining considerable appeal among US companies seeking alternatives to the conventional Chapter 11 bankruptcy proceedings. The evolution of this process, driven by judicial guidance and practical application, has solidified its position as a viable and attractive option for cross-border financial restructuring. Key developments, including enhanced judicial scrutiny and the formalization of mediation in certain cases, have further strengthened its efficacy and reliability.

UK Restructuring Plans: A Rising Alternative for Global Debtors

In the aftermath of the Court of Appeal's Petrofac ruling in the summer of 2025, which many observers initially viewed as a setback for the UK's Part 26A restructuring plan (RP) regime, the system has paradoxically emerged with renewed vigor. Far from being diminished, the English restructuring plan is now increasingly favored by US-connected debtors who are actively exploring options beyond the traditional Chapter 11 bankruptcy route. This shift signals a growing recognition of the UK framework's inherent flexibility and its capacity to deliver outcomes that may not be attainable under US law.

John Houghton, co-chair of Greenberg Traurig's Global Restructuring & Special Situations practice, noted that while many initially perceived Petrofac as curtailing the rapid adoption of RPs, his firm viewed it as a natural progression in the judicial development of the restructuring plan. He highlighted that despite the high costs and resource intensity that still deter UK mid-cap companies, the Part 26A process has proven exceptionally attractive to larger US corporations. Evidencing this trend, Nasdaq-listed entities such as Fossil, Argo Blockchain, and New Fortress Energy (NFE) have successfully utilized UK RPs instead of Chapter 11, forging a new cross-border restructuring pathway for US-listed groups. However, the recognition of these English proceedings in the US through Chapter 15 necessitates scrupulous adherence to US recognition standards, as clarified by a New York court's recent July opinion.

This adaptability has been particularly evident in cases like Adler and Thames Water, where the Court of Appeal outlined explicit expectations for stakeholder engagement, market testing of new capital, and consideration of out-of-the-money creditors' perspectives. This approach marked a departure from earlier precedents, requiring companies to provide more comprehensive justifications for their restructuring proposals. For instance, in the River Island case, which was already underway when the Petrofac decision was released, Greenberg Traurig had to swiftly adapt, providing far more detailed information on the calculation and distribution of restructuring surplus. PwC's subsequent plan benefits allocation report for River Island, analyzing value distribution among stakeholder classes, has since become a template for numerous subsequent RPs, despite judicial acknowledgments of its inherent assumptions.

Mediation has also emerged as a vital instrument to demonstrate robust stakeholder engagement. The Waldorf Production UK case, decided on May 5, saw the court endorse mediation efforts between all creditors. Although the UK tax authority, HMRC, declined to participate, the judge found their reasons unconvincing, underscoring the growing expectation for parties to engage meaningfully. Milbank partner Mona Vaswani and associate Ollie Winters emphasized that the Waldorf 2 ruling effectively mandates serious consideration of mediation to address court concerns and demonstrate genuine attempts at reaching common ground. Yet, some practitioners like Aaron Harlow of Greenberg Traurig suggest that mediation may not always be necessary if parties have already engaged in proper negotiations, as restructuring invariably produces winners and losers, and the critical aspect is to ensure all voices are heard fairly.

In July, Chief Judge Martin Glenn of the US Bankruptcy Court for the Southern District of New York articulated a clear analytical framework for Chapter 15 recognition in the NFE case. He acknowledged that certain features of English law RPs, such as non-consensual third-party releases, might extend beyond the scope of Chapter 11 relief. While Judge Glenn granted NFE's plan Chapter 15 recognition and did not contest the outcomes of other UK plans recognized in the US (including Fossil, Mega Newco, and Codere), his 57-page opinion expressed vigilance against “bankruptcy tourism”—the practice of shifting a company’s center of main interests (COMI) to a more favorable jurisdiction in a manner detrimental to creditors. However, the rigor of English court processes and their recent emphasis on fairness largely alleviate these concerns, according to legal sources.

Mark Knight, partner at Davis Polk, observed that Judge Glenn's opinion provides valuable clarity, confirming that RPs can offer an effective restructuring solution for US companies, provided appropriate safeguards ensure cooperation with US bankruptcy courts. This necessitates close collaboration between advisors on both sides of the Atlantic. A significant unresolved question remains how a truly contested English cross-class cramdown would fare at the Chapter 15 recognition stage, as no such case has yet been fully litigated in a US court. Nonetheless, John Houghton believes such scenarios would not undermine Chapter 15 recognition, citing past judgments that encouraged creditors to actively participate in sanction hearings rather than merely raising objections from the sidelines.

A critical advantage that London offers over the US as a restructuring venue is the ability for a company to maintain its Nasdaq listing throughout Part 26A proceedings. This aspect was thoroughly scrutinized in the Argo Blockchain case, where the retention of its listing was central to both the restructuring and its acquisition by Growler Mining Tuscaloosa. After extensive dialogue, the Nasdaq listing panel concluded that a Part 26A plan does not constitute bankruptcy or a business combination requiring delisting, satisfying the English judge that the plan was compatible with continued Nasdaq listing. While London's increasing prominence is prompting some US practitioners to consider a streamlined “Chapter 16” for debt-focused proceedings, London lawyers report a surge of interest from the Americas, drawn by the cost-effectiveness of court-approved restructuring outside the US. Matthew Czyzyk of Ropes & Gray highlighted the Fossil RP as a "beam of light" in the restructuring world of late 2025. However, experts like Jifree Cader of Davis Polk caution that the two legal frameworks are not interchangeable, as Chapter 11 remains indispensable for distressed companies requiring a global stay on creditor actions. Davis Polk’s Knight describes Chapter 11 as a "sledgehammer" while RPs are better suited for cases with broad creditor support and a focus on surgical balance sheet restructuring rather than operational overhaul. While the transatlantic path for English RPs is now well-established, the route from continental Europe is less so, as evidenced by the closely watched appeal of a Frankfurt court’s refusal to recognize Aggregate’s English plan.

The evolving landscape of cross-border restructuring, particularly the rise of UK restructuring plans as a viable alternative for US debtors, highlights the dynamic nature of international finance. This trend underscores the importance of legal frameworks that can adapt to complex financial challenges while maintaining fairness and transparency for all stakeholders. The increasing collaboration between legal professionals across different jurisdictions is crucial in navigating these intricate processes, ensuring that companies can effectively manage distress and emerge stronger. This development also challenges traditional notions of jurisdiction in bankruptcy, paving the way for more innovative and globally integrated solutions.