On 18 September 2025, the Chancellor of the High Court, the Rt. Hon. Sir Julian Flaux announced the long-awaited publication of the updated Practice Statement in relation to schemes of arrangement and restructuring plans (the "New Practice Statement"). Revision of the existing Practice Statement was, in large part, driven by the rise in contested schemes and restructuring plans which, in turn, has put significant pressure on the Court system.

Deal structure matters, particularly in bankruptcy. The Third Circuit recently ruled that a creditor’s right to future royalty payments in a non-executory contract could be discharged in the counterparty-debtor’s bankruptcy. The decision highlights the importance of properly structuring M&A, earn-out, and royalty-based transactions to ensure creditors receive the benefit of their bargain — even (or especially) if their counterparty later encounters financial distress.

Background

The English High Court has sanctioned a restructuring plan in respect of EUR 3.2 billion of bonds issued by the German real estate business, Adler Group. The main objective of the plan was to avoid Adler's imminent insolvency by facilitating access to EUR 937.5 million of new money funding and thereby providing a stable platform from which Adler Group can pursue a solvent wind-down by asset sales over time in recovered market conditions. This represents a novel use of the restructuring plan procedure, which has previously been seen exclusively as a corporate 'rescue' tool.

In bankruptcy as in federal jurisprudence generally, to characterize something with the near-epithet of “federal common law” virtually dooms it to rejection.

Pre-packaged administration sales (where a sale of key assets is agreed prior to the appointment of administrators and then implemented by the administrators immediately following their appointment), have been a widely-used and highly successful tool to rescue businesses, or parts of businesses, that may otherwise have languished in administration interminably.

Until recently, courts in the Ninth Circuit have generally followed the minority view that non-debtor releases in a bankruptcy plan are prohibited by Bankruptcy Code Section 524(e), which provides that the “discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, such debt.” In the summer of 2020, the Ninth Circuit hinted that its prohibition against non-debtor releases was not absolute, when the court issued its decision in Blixseth v. Credit Suisse, 961 F.3d 1074 (9th Cir.

In January 2020 we reported that, after the reconsideration suggested by two Supreme Court justices and revisions to account for the Supreme Court’s Merit Management decision,[1] the Court of Appeals for the Second Circuit stood by its origina

The economic impact of the COVID-19 pandemic led to a wave of creditor schemes of arrangement ("schemes") and restructuring plans ("RPs") in the second half of 2020, which shows no sign of abating in 2021. For the uninitiated, the scheme (a long-established tool) and the newer RP process are court led UK restructuring options that a company can use to bind a minority of creditors into a restructuring. An RP can also be used to "cram down" an entire dissenting creditor class into a deal where certain conditions are met.

HEADLINES

• In March 2020, credit insurer Euler Hermes forecast a 43% increase in insolvencies in the UK in 2021, as well as a 26% uptick in France and 12% in Germany
• By December 2020, ratings agency S&P was forecasting European defaults rising to as much as 8% by the end of 2021

There have been fewer European insolvencies and restructurings than anticipated during the COVID-19 pandemic, but distressed deal activity may accelerate as soon as economies are finally able to reopen.

If a creditor is holding property of a party that files bankruptcy, is it “exercising control over” such property (and violating the automatic stay) by refusing the debtor’s turnover demands? According to the Supreme Court, the answer is no – instead, the stay under Section 362(a)(3) of the Bankruptcy Code only applies to affirmative acts that disturb the status quo as of the filing date. In other words, the mere retention of property of a debtor after the filing of a bankruptcy case does not violate the automatic stay.