The UK retail and hospitality sectors are entering the crucial winter trading period under renewed pressure following the Chancellor’s November Budget. Economic growth remains weak, and the Office for Budget Responsibility has downgraded its annual economic forecasts through to 2030, signalling that the operating environment for consumer-facing businesses is likely to remain difficult for some time. Meanwhile, insolvency levels continue their upward trajectory: 2,029 company insolvencies were recorded in October 2025, a 17% increase compared with the same month last year.

On 27 February 2024, the High Court sanctioned a restructuring plan (the Plan) proposed by CB&I UK Limited (CB&I), part of the global McDermott construction and engineering group (the Group). This is the first English restructuring plan to be approved after the Court of Appeal judgment in Adler (see our Alert) and follows the guidance in that case.

Background

On 23 January 2024, the Court of Appeal overturned the High Court's sanction of Adler Group's (Adler) restructuring plan (the Plan) (see our alert). This much anticipated judgment provides clarity on the court's discretion to sanction a plan where there are dissenting classes of creditors.

Background

The Plan envisaged:

In its much-anticipated 2023 Autumn Statement, the UK Government has committed to extending the relief available to the hospitality, retail and leisure sector. It has also announced that a business rates support package worth £4.3 billion will be available to support small businesses and the high street. However, the hospitality sector remains one of the most vulnerable, and it remains to be seen whether this additional support will be enough.

The Court of Appeal has recently referred to established case law that the court will only interfere with the act of an officeholder “if he has done something so utterly unreasonable and absurd that no reasonable man would have done it”.

While the judge in the lower court had not made any error of law, on the facts there were identifiable flaws in the judge's reasoning that the trustees' decision not to join in the proceedings was perverse.

The judge had failed to recognise that:

The increasing rates of insolvencies in Small and Medium Enterprises (SMEs) following the COVID-19 pandemic is continuing at a high rate, and England and Wales have seen the highest rates of insolvencies since 2009. Compared with the second quarter of 2022, the total of registered company insolvencies has increased by 13%. Compared with the first quarter of 2023, the rate of insolvencies has increased by 9%.

Businesses are still struggling to recover post-Covid, with corporate insolvency figures continuing to rise. Recent research shows that the most common company insolvency procedure is creditors’ voluntary liquidation (CVL) and in March 2023, there was the highest monthly total of CVLs since January 2019.

The sectors that appear to have been hit the hardest are construction; wholesale and retail; accommodation and food services.

After a weekend that saw the tech ecosystem unite to fight for its future, on Monday 13 March 2023, the Bank of England (the Bank) effected the sale of Silicon Valley Bank UK Ltd (SVB UK) to HSBC. It used the resolution powers for stabilising failing banks granted by the Banking Act 2009 which were introduced following the 2008/9 financial crisis.

Resolution powers

Wilko Limited, known as ‘Wilko’, the well-known retailer specialising in home goods and gardening, is reportedly experiencing significant financial difficulties and is now relying on financial support to keep the business afloat.

Wilko has traded since 1930 as an independent family-run store and has expanded to over 400 stores. Despite this, Wilko has revealed it is experiencing financial difficulties when publishing its annual accounts to Companies House in November 2022.

The Supreme Court recently considered the existence of the “creditor duty” and when this duty arises in the case of BTI v Sequana. The creditor duty is the duty for company directors to consider the interests of the company’s creditors when the company becomes insolvent or is at real risk of insolvency.