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Restructuring GlobalView | Restructuring GlobalView | Cross Border Restructuring Matters | Squire Patton BoggsThe Restructuring GlobalView legal blog provides unique perspectives on restructuring and insolvency issues from around the globeRestructuring GlobalView | Restructuring GlobalView | Cross Border Restructuring Matters | Squire Patton Boggs Squire Patton Boggs MenuHome About Contact Subscribe Restructuring GlobalView Worldwide Restructuring and Insolvency News What are the Key Takeaways for managing HMRC in a UK restructuring plan (RPs) and beyond? By Rachael Markham, Charlotte Møller and John Alderton on April 15, 2025 Posted in UK Much will depend on the specifics of a company’s financial position, but there are some themes from the OutsideClinic and Enzen judgments that are helpful – and arguably so even beyond the context of RPs for a company’s managing its relationship with HMRC. Is HMRC in or out of the money? In OutsideClinic HMRC had reservations about the valuation evidence put forward by the plan company in support of its position that administration was the relevant alternative.  Under the RP HMRC stood to recover 5p in the £ but nil in the relevant alternative –  HMRC was therefore out of the money. The valuation evidence was based on certain assumptions in respect of the recoverability of book debts which if those turned out to be inaccurate would have entitled HMRC to a distribution in the alternative – meaning it would have been in the money. It was acknowledged by the plan company that it would only take a “relatively small shift” in the assumptions for this to be the case. Recognising the likelihood of HMRC being an in the money creditor on a contested application the parties negotiated an improved outcome for HMRC – funded by the plan investors – which would not impact the returns to other creditors. Take Away HMRC is different to other creditors given its secondary preferential status, and its voice as a creditor that is potentially in the money, where there is a prospect (even small) of it being paid in the relevant alternative should be listened to. This voice may in fact be louder now, following the Court of Appeal confirming in Thames Water that the views and treatment of out of the money creditors can be relevant when considering whether a plan is fair – particularly so given the elevated status that HMRC has on insolvency. Recognising HMRC’s role HMRC has preferential status on an insolvency such that its claims for certain tax liabilities rank ahead of other claims as preferential claims.  That status does not exist on an RP where a plan company is free to ignore the statutory order of priorities (provided it can be justified). Not only that, but HMRC’s as a creditor is also different to other creditors.  It has not chosen to trade with the company but is an “involuntary creditor” that continues regardless of whether HMRC is paid or not.  HMRC cannot “opt” out of that relationship like other creditors might do. The judge in Enzen observed that HMRC’s treatment under the Enzen plans (of which there were two) reflected: the standing of HMRC as preferential creditor; the commercial leverage that it is able to exert in consequence of Naysmyth and the Great Annual Savings Company; and the inevitability of an ongoing relationship as trading continues. Take Away What we have seen as a consequence of these particular RPs (and those before) is judicial acknowledgement of HMRCs status as a “prominent” creditor which could be translated to – treat them differently and better than unsecured creditors. That is all well and good, but we think it is probably fair comment to say that HMRC’s role in supporting a failing business can sometimes be seen as lacking or at least taken to be unsupportive.  But perhaps now is the time for both practitioners and HMRC to reflect on their historic views. What HMRC did demonstrate in both cases is that it was willing to engage, something that Mr Justice Norris said in Enzen was a “welcome development”.  This signals a positive change, not only, we hope for RPs but also more generally.  On the flip side, if a company is prepared to recognise at an earlier point that HMRC is an involuntary and ongoing creditor in its business then surely that would help manage that relationship in a positive way (whether in the context of an RP or otherwise). To pay or not to pay HMRC, that is the question? What we can gauge from OutsideClinic is that although certain HMRC liabilities were unpaid for three months in 2024, its remaining 2024 liabilities were paid in full and continued to be paid during 2025. In Enzen too, there were historic arrears but from June 2024 tax liabilities were being paid as they fell due, and current liabilities were excluded from the plan – in other words the companies did not seek to compromise those. Take Away Although there is no comment in the judgments about whether paying current liabilities influenced HMRC’s attitude, HMRC’s guidance makes it  clear that it will consider whether other creditors are being paid when HMRC is not, and whether the company will make future payments in full, and on time, when deciding whether to support a plan, Paying HMRC current liabilities is likely to encourage engagement and willingness to re-schedule or compromise historic liabilities.  Falling further into a black hole with tax debts, not paying HMRC and trading at its expense is likely to do the opposite.  Arguably the starting point for any company requiring HMRC’s support (whether that be for an RP or a time to pay agreement) is to be able to demonstrate that at least it will be able to meet future liabilities. Concluding Comments We have seen a positive change in HMRC’s approach in these cases which is very encouraging, but do we as practitioners need to do the same when it comes to managing relationships with HMRC generally?  That may depend on whether HMRC’s change in attitude extends beyond RPs. If there is more of a willingness to recognise HMRC’s role as an involuntary preferential creditor in negotiations, then perhaps we will see that reciprocated by HMRC showing a greater willingness to compromise in return.  However given that the thorny relationship runs quite deep, we expect practitioners will first want to see HMRC engage more regularly in a positive manner outside of RPs, and that would be a “welcome development”. Tweet this post Like this post Email this post Share this post on LinkedIn Tags: HMRC, insolvency, restructuring, restructuring plan El-Husseiny v Invest Bank – expanding office holder claims? (UK) By Chris Paschali on April 2, 2025 Posted in UK S423 of the Insolvency Act 1986 (IA 1986) provides a route for office holders to challenge transactions where a person deliberately transfers assets at an undervalue to put them beyond the reach of creditors. The Supreme Court in El-Husseiny and another (Appellants) v Invest Bank PSC (Respondent) [2025] UKSC 4 recently confirmed what is meant by “transaction” in the context of s423 – and that the same meaning should be given to “transactions” caught by s238 and s339 of the IA 1986. Claims under s423 can be more difficult to establish than claims under s238 of the IA 1986 because although both claims require there to have been a transaction at an undervalue (or for no consideration) s423 also requires an office holder to prove that there was an intention to put assets beyond the reach of creditors.  An office holder is therefore more likely to bring a claim under s238 than s423, and for that reason, this judgment is helpful because it broadens the types of transactions that might fall within the definition of “transaction”. Continue Reading Tweet this post Like this post Email this post Share this post on LinkedIn Tags: bank, claims, insolvency, investment, legislation, office holder, restructuring, Supreme Court, transaction And just like that another Restructuring Plan is sanctioned with HMRC supporting (UK) By Rachael Markham and Annabelle McKeeve on April 1, 2025 Posted in UK The Outside Clinic restructuring plan (RP) was sanctioned last week with HMRC voting in favour of it. In a similar vein to Enzen (see our earlier blog) HMRC initially indicated that it was not inclined to support the plan, but, after negotiating a higher return following the convening hearing, it voted in favour of it. A somewhat different outcome in circumstance where HMRC had (prior to the company proposing a plan) instructed its solicitors to present a winding up petition after attempts to agree a time to pay agreement had failed. Continue Reading Tweet this post Like this post Email this post Share this post on LinkedIn Tags: contentious, cram down, creditors, HMRC, insolvency, restructuring, restructuring plan, sanction HMRC Supports a UK Restructuring Plan with its Change in Approach – Good News for Future RPs? By Annabelle McKeeve and Rachael Markham on March 27, 2025 Posted in UK You may have read our previous blog about the Outside Clinic Restructuring Plan (RP) which asked whether 5p was enough to cram down HMRC and thought, well surely if that’s not enough, 10p would work? The Enzen Restructuring Plans (RPs) that were sanctioned this week also sought to compromise HMRC’s secondary preferential debt proposing a payment that would see HMRC recover 10p in the £ compared to nil in the relevant alternative. The Enzen RPs were not only sanctioned but also supported by HMRC – does this signal a change in attitude by HMRC? Continue Reading Tweet this post Like this post Email this post Share this post on LinkedIn Tags: contentious, cram down, creditors, HMRC, insolvency, insolvency practitioner, legislation, litigation, restructuring, restructuring plan (UK) The issue with hybrid insolvency claims rumbles on By Jon Chesman on March 24, 2025 Posted in UK Should a claim be struck out where the applicant has failed to comply with the procedural requirements relating to “hybrid” claims? In the recent case of Park Regis Birmingham LLP [2025] EWHC 139 (ch), the High Court held that it would be disproportionate to strike out the claim on that basis. Continue Reading Tweet this post Like this post Email this post Share this post on LinkedIn Tags: company claims, court fees, haywardandbarrett, insolvency, legislation, restructuring, Strike out U.S. Trustee Objects to Stalking Horse Bid Protections in Three Recent Delaware Bankruptcy Cases By Kyle Arendsen on March 14, 2025 Posted in US Recently, the Office of the United States Trustee (the “UST”) has been objecting to debtors’ motions to establish bidding procedures to sell some or all of an estate’s assets pursuant to section 363 of the Bankruptcy Code.   As highlighted in three recent Delaware cases, the UST has objected to stalking horse bid protections on a number of grounds, including: (a) when such protections would be payable; (b) the proposed priority classification for such protections; (c) the scope of the bid protections; and (d) whether the debtor has demonstrated that such protections benefit the estate and are necessary to preserve estate value.  Understanding the UST’s concerns is critical when negotiating with a stalking horse bidder.    Continue Reading Tweet this post Like this post Email this post Share this post on LinkedIn Tags: #UStrustee, Bankruptcy, Delaware, Stalking Horse (UK) Is 5p enough to cram down HMRC in a Restructuring Plan? By Rachael Markham on February 28, 2025 Posted in UK For those in the mid-market who have watched developments in restructuring plans (RP) move from a potential rescue tool, to something prohibitively expensive, the OutsideClinic RP might be one to watch. Not least because the RP seeks to cram down HMRC. Following RPs proposed by Naysmyth and the Great Annual Savings Company (which were unsuccessful in cramming down HMRC) the appetite to use an RP in the mid-market does seem to have quietened down, despite HMRC subsequently issuing guidance for insolvency practitioners intended to help companies that wish to restructure using an RP. Continue Reading Tweet this post Like this post Email this post Share this post on LinkedIn Tags: administration, creditors, HMRC, insolvency, legislation, preferential, restructuring, restructuring plan Update of German Law Aspects of Crypto Assets By Andreas Fillmann on February 27, 2025 Posted in EU Our recently updated article considers how EU and German civil and regulatory law approach crypto assets with a particular focus on how those types of crypto assets are dealt with in an insolvency. In this article we explore the different types of crypto assets there are, the legal nature of them, how crypto assets are dealt with in insolvency proceedings and the recovery of such assets. Tweet this post Like this post Email this post Share this post on LinkedIn Tags: assets, crypto, insolvency, legislation, restructuring, safeguard (UK) Office-Holder Remuneration Applications – the importance of details By Vanessa Stuart on February 27, 2025 Posted in UK When it comes to applications by office-holders for approval of their remuneration, the message in the case of Poxon and another v Wejo Ltd (in administration) [2025] EWHC 135 (Ch) was, the detail matters. Background Having failed to obtain approval from the creditors in respect of both their pre and post administration costs, the joint administrators of Wejo invited the court to fix the basis of their post-administration remuneration and expenses by reference to time properly spent by them and their staff in attending to the administration of the company pursuant to r. 18.23 of the IR 2016 and approve their unpaid pre-administration costs as an expense of the administration pursuant to r. 3.52(5) of the IR 2016 (the Application). Certain creditors of Wejo intervened to oppose the Application on the grounds that the joint administrators’ evidence in support was insufficient to enable to court to properly consider the Application.  Continue Reading Tweet this post Like this post Email this post Share this post on LinkedIn Tags: administration, contentious, creditors, fees, insolvency, litigation, remuneration, restructuring Are you making progress? The Scottish court provides helpful pointers to English administrators seeking to extend on the content of progress reports By Rachael Markham on February 12, 2025 Posted in UK Although the case of Anthony John Wright and Alastair Rex Massey vs. Scottish Court of Session [2024] CSOH 105 is (as the name suggests) a Scottish decision, there are several takeaways from the case relating to the content of progress reports, which could usefully be applied and followed by English practitioners when making their own application.  Not least, because of the words of warning from the judge: “It is important that administrators and their advisers bear in mind that an extension of an administration should never be applied for, or granted, as a matter of formality. It is not uncommon for the court to encounter cases where serial applications have been made, often on (literally) the same grounds from 1 year to the next, with no discernible sign of progress being made; and of course, if there is an expectation that extensions will be granted without difficulty, there is a danger that administrators will not be incentivised into completing the administration within the existing deadline, confident that another one will be along in the fullness of time“ This case concerned an application to extend an administration that had originally commenced on 19 November 2020 and had been extended on three previous occasions.   The court was keen to understand what progress had been made, that creditors had been informed of the application and given a chance to object and that the extension period was the appropriate length. Despite the warning above the judge acknowledged that this administration was complex and did not fall into that category and was prepared to take at face value the assertion that further time was required to conclude the administration, despite some misgivings about the information in the progress reports. Continue Reading Tweet this post Like this post Email this post Share this post on LinkedIn Tags: administration, administration extension, administrators, court, insolvency, practitioners, progress report, restructuring Older Posts Visit our Restructuring & Insolvency Thought Leadership Library RegionsAustralia Cross Border EU UK US Stay Connected Subscribe By Email Your website url Recent Updates What are the Key Takeaways for managing HMRC in a UK restructuring plan (RPs) and beyond? El-Husseiny v Invest Bank – expanding office holder claims? (UK) And just like that another Restructuring Plan is sanctioned with HMRC supporting (UK) HMRC Supports a UK Restructuring Plan with its Change in Approach – Good News for Future RPs? 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