Practice Statement 2.0: A significant milestone for Part 26 Schemes / Part 26A Plans?

Introduction

Changes are afoot to Court rules for English in-court restructuring processes to make them fit for the future. On 18 September 2025, the Court issued a refreshed Practice Statement that redefines how companies and advisors should approach Schemes of Arrangement under Part 26 (Schemes) and Restructuring Plans under Part 26A (Plans) of the Companies Act 2006 – it will be applicable to all applications where a convening hearing is listed on or after 1 January 2026. The Practice Statement applies to both member Schemes used for takeovers and creditor Schemes (save for certain provisions, which do not apply to member Schemes), but in this blog, we focus solely on the creditor Scheme aspects.

This is not just a procedural update. This new guidance reshapes the legal and strategic contours of these powerful restructuring tools – impacting how they are proposed, scrutinised, challenged, and sanctioned. Whether you are a company in distress, a creditor, or a practitioner navigating the complexities of corporate turnaround, these changes are set to influence your playbook.

In this blog, we break down what is new, why it matters, and how it could shift the dynamics of future restructurings. 

Background

For almost three decades, Schemes have been a cornerstone of UK financial restructuring practice. They are rooted in very limited legislative provisions, supplemented by a Practice Statement (originally issued in 2002) that set expectations around creditor engagement and court sanction. The landscape shifted in 2020 with the arrival of Plans – bringing with them a game-changing feature: the ability to bind dissenting classes through cross-class cram down.

As both tools have been central to and have gained traction in complex restructurings (many of which our team has been actively involved in (e.g. the Plans for Thames Water, ED&F Man and Aggregate)), the courts have faced mounting pressure to address inconsistencies in disclosure, fairness and procedural clarity. The result? A newly revised Practice Statement that now governs both Schemes and Plans.

But this is not just a tidy-up of legacy rules – it is about modernising the framework to promote transparency, streamline processes, and ensure a level playing field for all stakeholders. 

Key Changes and Practical Implications

Here is a breakdown of the most notable changes and what they mean in practice.

Claim Form – No Hearing Without It (Paragraph 6 of the Practice Statement)

A Claim Form must now be issued before a hearing date can be obtained (for creditor Schemes and Plans). This represents a clear departure from the recent, more informal approach, where companies would typically begin discussions with the Court around four to five months ahead of the anticipated convening hearing, informally checking diary availability and reserving dates, often on an anonymised basis whilst commercial discussions would progress in parallel. 

However, while transparency is key to restructuring proceedings, the new Practice Statement acknowledges that some Schemes and Plans are best launched behind closed doors. Early public disclosure can derail negotiations, unsettle markets, or jeopardise stakeholder trust. To manage this risk, applicants can seek confidentiality protections from the outset. Two tools are available: (i) restricting access to the court file under CPR Part 5; and/or (ii) withholding the identity of the applicant or company under CPR Rule 39.2(4).

Once proceedings begin, certain court documents - like statements of case and public orders - are generally accessible. But CPR Rule 5.4C(4) gives applicants a route to protect sensitive material by requesting the Court to restrict access for non-parties. While CPR Part 5 does not spell out the grounds for such orders, the usual trigger is the presence of confidential or commercially sensitive information. Applicants can ask the Court to tailor access in several ways, including: (i) blocking access entirely; (ii) limiting access to specific individuals or groups; (iii) releasing only redacted versions; or (iv) making any other order the Court considers appropriate. The Court has wide discretion to restrict access to documents - but it will not do so lightly. With open justice as the default, applicants must present a compelling reason to override it. While the rules offer little guidance on how this discretion is exercised, one thing is clear: restrictions will not be granted automatically. The burden is on the applicant to show why transparency should give way to confidentiality.

CPR Rule 39.2(4) goes further, allowing the Court to grant anonymity where it is essential to protect justice or the interests of those involved. This might be necessary if revealing a party’s identity could spark market disruption, breach confidentiality, or pose personal risks. If granted, the party is typically referred to by initials or anonymised labels - think ‘Re: A Company’. But anonymity is a rare exception to the principle of open justice, and the courts will only allow it where it is strictly necessary.

While these provisions offer a vital safeguard for companies facing sensitive financial situations, market volatility, or reputational risk, they do not come without cost. An order withholding disclosure of the applicant’s identity can only be made if the Court considers non-disclosure necessary to secure the proper administration of justice and in order to protect the interests of any person. The fact that the Practice Statement refers to both these methods of restricting disclosure does not of itself mean that the Court will be convinced that the relatively high threshold the rule provides has in fact been met. What evidence will a company need to show to get the Court to make such an order? And when will such evidence need to be presented? As a practical matter, the application to restrict access to court documents will need to be made even before the claim form is filed through the public CE File system, to ensure that access is restricted from the very start. While such applications may be made without notice, the Court retains discretion to direct that notice be given to any person affected by the decision. Conceptually, this could include the very person or party from whom disclosure is sought to be withheld – though in practice, it seems unlikely that the Court would require service of notice where doing so would undermine the purpose of the application, such as where the aim is to prevent early public disclosure of a Scheme or Plan. However, this does raise a procedural consideration: if notice is required, the first formal step of the Scheme or Plan may shift even earlier than the filing of the Claim Form to the point of making the application.

Responses to the public consultation on the Practice Statement that was launched earlier this year (the Consultation) had highlighted the issue that the filing of a Claim Form is often a trigger for events of default under finance documents. Without a moratorium on creditor action (which neither a Scheme nor a Plan provides before sanction) this has the potential of derailing a restructuring before it has even started. So, much work will need to be done by the company ahead of filing to ensure that individual enforcement actions are minimised. In large scale financial restructurings, the frequently seen lock up agreement may do this work and provide for a contractual standstill, but for restructurings that involve disparate groups of creditors, such as landlords, this can be expected to have a larger impact, which the company is less likely to be able to address. The fact that access to the court file may be restricted does not mean that an event of default has not arisen. 

It will be interesting to see how the Court addresses such applications. 

Listing Note – Planning Ahead (Paragraph 7 of the Practice Statement)

Alongside the Claim Form, applicants must now also file a Listing Note – a new requirement designed to help the Court manage applications more effectively. The listing note must include: (i) time estimates for the convening and sanction hearings; (ii) an indicative timetable for the entire process, including any anticipated appeals; (iii) key factors that could affect the timetable, such as financial pressures or contested issues; and (iv) any urgency, with an explanation of its cause and timing. 

If any of this information changes materially, the applicant must notify the Court as soon as practicable. 

While Paragraph 7 of the Practice Statement indicates that the Listing Note is intended primarily to be an internal document for the Court, to be used as a tool in listing and case management in the early phases of any new claim, it is not in fact clear who will have access to and sight of the Listing Note. In some way, from a proposing company’s perspective this is information that is critical to how to conduct the restructuring, and it would not be desirable from the company’s perspective to effectively disclose all possible appeals and contested issues to dissenting creditors - whose playbook would be much enriched by having access to the information. Moreover, there is a risk that opposing creditors may assert that issues are contested not necessarily because they are genuinely disputed, but as a tactical move to prolong the timetable and exert pressure on the company. This raises important questions about how the Listing Note will be used and safeguarded in practice.

Affected Parties – Clear, Concise Communication (Paragraphs 13 – 15 of the Practice Statement)

These paragraphs describe what the practice statement letter – the letter that the proposer of the Scheme or Plan will send to creditors formally kicking off the process and informing creditors of the issues - is to cover. This requirement is not new – it was at the very heart of the 2002 Practice Statement. Applicants are required to notify affected parties in writing, providing a clear summary of: (i) the existence and purpose of the Scheme or Plan; (ii) expected meetings and their composition; (iii) details of the convening hearing (time and place); (iv) confirmation of their right to attend both the convening and sanction hearings; and (v) how to make enquiries or access further information.

Now, however, the Practice Statement also reemphasises the need for brevity and clarity – ideally through a short or tabular format. Practice statement letters have recently tended to be very detailed – not least so that creditors had the full picture and so that the company could not be criticised for lack of information. However, in situations where time is tight, excessive disclosure can hinder effective and timely scrutiny and challenge, rather than support it. The Court’s preference for a more focused summary of key issues reflects a shift away from the ‘kitchen sink’ approach towards more efficient case management.

Applicant Evidence at the Convening Hearing: Early Transparency (Paragraphs 16 and 17 of the Practice Statement) 

At the convening hearing, applicants must provide more detailed evidence, including: (i) how notice of the hearing was given and what responses were received; (ii) whether the Listing Note needs updating; and (iii) how meetings will be notified to affected parties.

For Plans, where a cross-class cram down might be used, applicants must also disclose: (i) whether cram down is likely; (ii) the extent and nature of engagement with different stakeholder groups; (iii) any objections or alternative proposals received; and (iv) what information has been shared so far – and why any differences exist. In this regard, the Practice Statement incorporates and gives effect to key procedural guidance on Plans recently articulated by the Court of Appeal in two high-profile restructurings - Thames Water and Petrofac - helping to codify emerging judicial expectations into a consistent framework.

Applicants must also explain how they will continue to share information after the convening hearing. While this evidence does not need to be filed with the claim form (as would ordinarily be the case under the CPR Part 8 procedure), it should be made available to stakeholders at least 14 days before the convening hearing. This timetable effectively also bakes in a “right of response”, stipulating that any party objecting to the Scheme or Plan, whose objection is likely to have an impact on matters to be considered at the convening hearing, should identify the nature of their objections at least seven days prior to the convening hearing. While in exceptional cases, a shorter timetable may be justified, this will go some way to ensuring that convening hearings can be used effectively to case manage the remainder of the process.

Case Management: Efficiency (Paragraphs 26 – 28 of the Practice Statement)

The Practice Statement actively encourages the Court to issue case management directions at the convening hearing to streamline proceedings. These might include, for example: (i) defining the scope and timing of issues to be resolved; (ii) managing the service of evidence and expert reports; (iii) directing further disclosures to affected parties; and (iv) addressing costs for those opposing the Scheme or Plan.

The Practice Statement also encourages a proactive approach to avoid procedural snags. A cautionary tale comes from Madagascar Oil, where the Court refused to take the pricing of new money into account when assessing the fairness of the Plan - simply because the objecting party had not raised it properly in their grounds of objection or cross-examination. Under the new framework, such oversights should be avoided, with key issues flagged early and dealt with head-on.

The Practice Statement leaves room for case management hearings to help tailor directions to the needs of each case. While some Consultation responses welcomed this flexibility, they also warned against making Case Management Conferences (CMCs) a default step. In complex cases - especially those involving expert evidence - a CMC before the convening hearing might be useful. But if this becomes routine, it risks adding unnecessary time and cost to a process that already involves two court hearings. This is particularly problematic for SME restructurings, where efficiency is key and resources may be limited.

Looking Ahead

The new Practice Statement is the Court’s formalisation of several warning shots made in recent Plans and, as highlighted in this blog, it is almost possible to identify from each paragraph in the Practice Statement the case from which it derives. Its true significance will emerge not from the text itself, but from how it will shape restructuring practice. Over the coming months and years, early decisions will likely set the tone: defining what counts as ‘sufficient’ disclosure, how strictly procedural rules will be enforced, and how far the courts will go to intervene when parties fall short.

For Scheme and Plan companies, this means a shift in strategy. Expect more front-loaded preparation: building a robust evidential record early, anticipating creditor pushback, and crafting a clear, defensible narrative around fairness and transparency. The margin for error is narrowing – and the expectations are rising. 

For creditors, the changes may open new avenues to challenge proposals. Where transparency is lacking or cross-class cram down is used aggressively without prior bargaining, the courts may be more receptive to objections – especially if procedural missteps or uneven engagement are evident. 

Schemes and Plans continue to stand out in the global restructuring toolkit, offering speed, flexibility, and court oversight that many non-UK alternatives struggle to match. As these tools inevitably draw comparisons with overseas options, it is important that the revised Practice Statement is seen for what it is: a step toward greater clarity of expectations upfront and procedural integrity. With the right implementation, these changes should strengthen confidence in England as a leading forum for complex restructurings.

The new Practice Statement can be accessed here.