Restructuring – 2025 in review and predictions for 2026

If recent years were marked by the development of a new generation of court-based restructuring tools, 2025 was the year they were stress-tested.  Combined with the arrival of aggressive US-style liability management exercises (LME) in Europe and litigation connected to them, the global restructuring environment is now more complex and contentious than ever. In this year-end review, we dissect these global trends and forecast the key battlegrounds for 2026 across major European jurisdictions.

GLOBAL LEGAL RESTRUCTURING TRENDS

The key global trends, discussed below, reveal a tension between the use of powerful but sometimes unpredictable court-supervised restructuring plans (which face challenges in litigation and cross-border recognition) and a movement towards the perceived certainty of using private, contract-based enforcement mechanisms.

Restructuring plan innovation and cram-down evolution

The proliferation of flexible, court-supervised restructuring procedures continued in 2025, each offering a unique approach to cross-class cram-down and fairness assessments. While the UK’s Restructuring Plan arguably had the most attention, Germany’s StaRUG, the Dutch WHOA, France’s accelerated safeguard and Italy’s reformed concordato preventivo have all pushed the boundaries in setting standards for confirmation, dissent and creditor treatment. This has created a competitive marketplace of restructuring tools as each jurisdiction vies to provide a viable (and more cost effective) alternative inspired by the US Chapter 11 process. 

Recognition of restructurings

For multi-jurisdictional groups, navigating the complexities of recognition and enforcement remains a critical challenge. With the UK outside the recast European Insolvency Regulation and the Brussels I Regulation, practitioners must increasingly rely on local private international law, local implementations of the UNCITRAL Model Law and the evolving and divergent practices of domestic courts in relation to recognition of foreign restructuring processes. We are currently seeing this play out in the challenge to the UK’s Aggregate plan before the German courts.

Liability management, transactional creativity …. and litigation

Liability management exercises were a dominant theme in the US in 2023 and 2024, and commentators correctly predicted that 2025 would be the year they arrived in Europe. As the Victoria, Hunkemöller, Selecta and Hurtigruten transactions have shown, the prediction has come true.

US courts have shown varying tolerance for these aggressive tactics over the years. We are now seeing European courts hear their first challenges to similar arrangements based on local law principles. This has given rise to challenges where doctrines such as 'abuse of rights', 'good faith' and “prohibition of immoral transactions” are being invoked in an attempt to constrain these arrangements. The ongoing litigation involving Hunkemöller and Selecta are the primary test cases for this trend, and with more litigation anticipated in 2026, there is a strong prospect of gaining much-needed judicial clarity in this highly uncertain area.

A new battleground has also emerged in the restructuring landscape: direct challenges to creditor co-operation agreements. Initially formed as a defensive shield to ensure lenders act together to resist LMEs, these pacts are now being actively targeted themselves (including on anti-trust grounds). Challenges have been brought both by debtors (as seen in Optimum) and by creditors outside the co-operation agreement seeking to challenge transactions implemented by co-op groups (as seen in Selecta). This marks a new phase of intercreditor conflict where it is no longer just about executing an LME, but about the preliminary battle to break the defensive front formed to resist it. We predict this will become a key feature of the restructuring landscape in 2026.

Intercreditor implemented restructurings

A key trend that gained significant momentum in 2025, and which we expect to accelerate into 2026, is the rise of intercreditor implemented where restructurings are implemented through contractual mechanisms, rather than formal court proceedings. This strategic pivot towards relying on contractual remedies can be seen as a direct reaction to the evolving case law and associated uncertainties connected to court-supervised restructuring tools. As a result, parties have shown a greater willingness to utilise powerful enforcement and debt restructuring mechanics found within intercreditor agreements, especially the ‘distressed disposal’ provisions typically found in LMA-style intercreditor agreements.

Harmonisation – the EU marches on

An area closely watched by EU member states is the ongoing march towards harmonisation of insolvency law. The proposed directive unofficially dubbed "Insolvency III" (due to be signed into law early in 2026) will introduce (amongst others) a pre-pack sales procedure, a mechanism currently absent from many European insolvency systems that could streamline the sale of viable business assets. The directive will also introduce a requirement for directors to file for insolvency – which some EU jurisdictions of course already have (everyone will know about Germany) but across the board it is more nuanced. As can be expected, the final compromise in the harmonisation directive was significantly watered down from the hard filing deadline the instrument started with – but expect at least a soft shift in any event. We will report when the text of the directive is available. 

JURISDICTION SPECIFIC TRENDS

Taken together, these trends paint a clear picture of a global restructuring landscape that is more strategically complex and contentious than ever. The playbook is shifting from consensus-building to a multi-front conflict, where the choice of process (court-led versus contractual) is as critical as the commercial terms. However, these global forces do not operate in a vacuum. Their practical impact, and how they can be navigated or exploited for managing risks and identifying opportunities, is ultimately determined by the specific laws, judicial philosophies and market practices at the national level. With that backdrop, we now turn to the jurisdictional detail.

The UK

2025 was the year the restructuring plan's theoretical power was truly tested. We witnessed the Court of Appeal overturning a sanctioned plan (Petrofac) and the High Court refusing to sanction another (Waldorf). This marked a pivotal shift, moving the focus from jurisdictional tests to the court's exercise of its discretion.

Last year we made a number of predictions for 2025 (see our blog here). Let’s see how we fared. 

• How should the restructuring surplus be shared out? This question, now framed as the allocation of "restructuring benefits," was front and centre in 2025 with the trilogy of cases in Thames, Petrofac, and Waldorf. They provided a clear, albeit demanding, answer: the "no worse off" test is merely a jurisdictional gateway, not a justification for unfair value allocation. However, following Sino-Ocean and Enzen, it remains clear that departures from absolute priority are permissible where there is a compelling justification.
• Third party releases (again) While there was no landmark UK ruling, the Petrofac plan's inclusion of releases for directors kept the issue on the court's agenda. Meanwhile, the impact of the Purdue decision on Chapter 11 restructurings (preventing the use of third-party releases) and the recognition of foreign plans remains a hot topic in the US and beyond. Yuzhou did not provide a definitive answer and courts are holding firm that their power to recognise a foreign proceeding and associated third party releases is distinct from the court's narrower authority in a domestic Chapter 11 case.
• Restructuring plan meets litigation. Last year, we asked whether English courts would use tools like case management conferences to manage challenges within a reasonable court timetable. In fact, the court has gone further than that with the revised practice statement setting out active case management powers coming into effect in January 2026 - see our blog here.
• Restructuring plans to address mass claims. With mass claims of many types at an all-time high in the UK, we also asked whether 2025 would see more use of schemes and restructuring plans as a way of channelling such claims. On this one, we’re saying we weren’t wrong, just a year early – we’re rolling this prediction over into our 2026 forecast.

So, in an effort to set the marker for next year, what do we think are the key topics to watch for England in 2026?

• Treatment of out of the money creditors and the restructuring benefit allocation: given that the much-anticipated appeal by Waldorf of its denied restructuring plan is now not going to be appealed to the Supreme Court case law will evolve more gradually starting from Petrofac – rather than with a big Supreme Court bang – certainly the topic remains very live and parties will need to feel their way to the correct solution.
• Creditor disenfranchisement and class composition: expect further legal scrutiny around the exclusion of certain creditors from voting, particularly where disputed or “out-of-the-money” entitlements are at stake.
• Third-party releases: any further developments on obtaining Chapter 15 recognition for plans with third-party releases post-Purdue willbe watched closely.
• Impact of the new practice direction: the new practice direction for schemes and plans will undoubtedly change how these proceedings are prepared and conducted (see our blog here).
• What will happen to Thames restructuring plan 2.0? the fate of this water utility company and its second restructuring attempt remains a critical question for the new year.
• The UK's Approach to Minority Protections Challenges: in light of challenges to LMEs, the UK courts are being asked to rule on their fairness in light of the minority protections applied in Assenagon and other cases. We expect to see the significant English judgments on these issues in 2026, setting important precedents on their application in the context of non-pro rata and coercive transactions. 

Germany

Key topics in Germany to watch in 2026 include:

• StaRUG evaluation: StaRUG has gained massive traction in the German restructuring market. Now, about 5 years after inception of StaRUG, the restructuring framework is undergoing a scheduled evaluation, both nationally and at the EU level. The German Ministry of Justice is assessing its effectiveness and where the new law could be improved to better adapt it to the needs of and to address concerns raised by courts and practitioners. This evaluation could lead to certain “facelifts” of StaRUG. Main areas under discussion among practitioners and legal scholars are, e.g. the question whether the initiation of StaRUG proceedings requires shareholder consent, the exclusion of subscription rights of existing shareholders in the context of capital measures and the appeals regime.
• Challenge to the UK restructuring plan in Aggregate:  this ruling has surprised many in the cross-border restructuring community, questioning the long-held strategy of using English restructuring tools to restructure German companies. However, the decision concerns German law governed debt which is more unusual in an international context and the judgment is only the first step and has already been appealed so much is still to play for.  
• Harmonisation of insolvency laws / pre-pack: the introduction of a legislatively sanctioned pre-pack procedure could offer a faster, more efficient path to preserving viable businesses, complementing the existing toolkit of the Insolvency Code and StaRUG. Once the directive comes into force, the discussion about the details of the design and implementation of the pre-pack procedure in Germany will gather momentum.
• LMEs reaching the German market’s doorstep: as alluded in the global trends the key question for 2026 is not if but how LMEs will be implemented in Germany. When structuring an LME in Germany, practitioners must navigate a legal landscape that overall makes it slightly more difficult – but in no way impossible - to implement such transactions compared to England or the US.

France 

Key topics in France to watch in 2026 include:

• Uptick in LBO restructurings - After a wave of restructurings involving large corporates (Orpea, Atos, Casino, Altice France, to name a few), the spotlight is shifting toward leveraged buyouts. Many private equity-backed companies, financed during an era of cheap debt, now face mounting pressures: higher interest rates, looming maturity walls, and sector-specific stress (notably in TMT, laboratories, chemicals, and pharmaceuticals). Market participants’ attention is expected to be focused on stressed sponsor-backed businesses in 2026.
• LMEs – France is probably approaching a turning point for liability management exercises. Although a meaningful LME precedent has yet to fully realize, recent developments suggest significant potential for these tools in the French stressed and distressed landscape. The high-profile deleveraging transaction of Altice France (although ultimately resolved in-court through conciliation and an accelerated safeguard process) and Kem One refinancing through a pari plus type structure (although that situation is still developing) evidenced how LME strategies could potentially be used by French obligors. French specificities—such as directors’ duties and a cultural inclination for preventive and amicable proceedings—are likely to shape LMEs structures, but without diminishing their potential to become a credible option within the restructuring toolbox.
• Proposed EU Directive “Insolvency III” – the proposed directive’s impact on France is expected to be evolutionary rather than revolutionary. Many of its core concepts are already embedded in French law, such as directors’ obligations to file for insolvency and a well-developed and reliable framework for pre-packaged sales.
• Valuation - challenges - although valuation is theoretically the cornerstone for applying the (cross-class) cram-down mechanism, it has not emerged as a major point of contention in France’s restructuring cases so far. In large cases recently, the “value break” was either obvious or largely irrelevant due to the high level of support, resulting in minimal judicial scrutiny of valuation methods. In addition, French insolvency courts often pre-emptively appoint independent experts to perform valuations required for plan approvals. Nonetheless, stakeholders still face limited visibility into both the data and methodologies behind valuations - with tougher restructurings on the horizon the system may soon face real tests on how valuations should be determined and substantiated. 

The Netherlands 

• LMEs: two key European LMEs have a strong Dutch nexus: Hunkemöller and Selecta. The debate in both cases includes the duties of directors of Dutch entities in an LME context, on which further guidance by the courts is expected in 2026. With many international Dutch holding companies, an effective and well-established share pledge practice and a flexible legal regime, the Netherlands is a key forum for future LMEs (and related litigation).
• WHOA: the WHOA has moved from a ‘novelty’ to a ‘standard tool’, with the first government evaluation confirming its success. As a result of clear guidance on the outcome under the WHOA (including allocation of value), the WHOA is often used as a stick in negotiations to achieve a consensual outcome, reducing the number of actual WHOAs. Share pledge enforcements - which used to be the predominant Dutch restructuring tool prior to the WHOA - have regained popularity at the expense of the WHOA as part of the rise of LMEs. For 2026, we expect the WHOA to reclaim territory as the tool that ultimately provides for more deal certainty and results in less risks and litigation.
• Mass claims: one area where we expect an uptick of WHOAs in 2026 in particular is mass claims (noting that LMEs usually cannot resolve this). The WHOA is an attractive venue as it has a very flexible jurisdiction criterium, third-party releases are widely included in Dutch WHOA plans and the WHOA is very cost effective, especially compared to Chapter 11.  The Netherlands is a European mass claims litigation hub (outside of insolvency) and Dutch insolvency was used for mass claims before (e.g. suspension of payments of Steinhoff), but as regards WHOA restructuring mass claims are still largely unchartered territory.
• Treatment of new money: the WHOA allows for amending the waterfall (contractually and in rem) and challenge proof security, thereby supporting new money. Although the WHOA provides clear guidance of the allocation of value between the existing creditors, less hard-and-fast rules exist around the allocation of value between new money providers and existing lenders. We expect this point to be further litigated in 2026, in particular in relation to non-pro rata elevation transactions
• Forum shopping: the (private) WHOA has a flexible jurisdiction criterium and there have been cases where the governing law has been amended to circumvent the rule in Gibbs to restructure (originally) English law debt (e.g. BioCity). Equally, we see that Dutch companies continue to use the UK scheme of arrangement in pari passu structures (e.g. Accell) and expect this to continue in 2026.

Italy 

• CNC becomes the go-to early intervention tool: the Negotiated Settlement of Crisis (CNC) is now firmly established as the leading pre-insolvency process, supported by increased digitisation, streamlined court processes, and growing familiarity among stakeholders. Filings and success rates are rising. Early action is crucial — companies that act promptly can benefit from protective measures, super-priority financing, and settlements with tax/social security authorities. Businesses with robust governance and qualified advisors are best placed to access these benefits, and broader uptake is expected across company sizes as the process becomes more efficient and transparent.
• Insolvency law reforms offer greater flexibility and new tactical opportunities: amendments to the Italian Insolvency Code (CCII) now allow entry into the CNC even for companies already in a state of insolvency, widen the ability to settle public claims, and place stronger obligations of good faith on parties. Together with alignment to EU restructuring frameworks, these changes are increasing legal certainty and making pre-insolvency processes the default route for many restructurings—facilitating faster resolutions and attracting more international investor participation.
• Private credit and LMEs gain momentum: private credit funds and alternative capital providers are deepening their presence in Italian restructurings as traditional banks continue to limit their exposures. Recent deals feature unitranche loans, bespoke financing, and innovative LMEs. The ongoing legal modernisation of Italian lending structures and restructuring tools together with Italy’s relative economic robustness is expected to continue to foster increased lender confidence, with stakeholders likely to continue using the CNC and related procedures to achieve safe-harbours and predictable outcomes. Securitisation—long a feature of the domestic NPL market—will be deployed for both distressed and semi-distressed corporate exposures as a way of bringing in required liquidity, following successful cross-border models.
• Ongoing sector-specific stress — Construction, fashion, retail, and automotive: sectoral distress will remain acute due to persistent demand volatility, supply chain challenges, cost inflation, and heightened ESG and digitalisation requirements. Companies in these sectors will increasingly require new capital injections and deleveraging solutions, utilising the expanding restructuring toolkit (including protective pre-insolvency mechanisms) to stabilise their financial positions and navigate new regulatory and market pressures.

Closing reflections

As we close the book on 2025, it is clear that the global restructuring landscape is more dynamic and interconnected than ever. The economic pressures of the past year have stress-tested legal frameworks, forcing innovation while simultaneously exposing limitations. The rise of contentious LMEs, the critical legal challenges to cross-border restructurings, and the flight to the perceived certainty of contractual workarounds have set the stage for a transformative 2026. Next year promises to deliver crucial judicial guidance and legislative change that will redefine the rules of engagement for debtors and creditors alike. The only certainty is that the pace of change will not slow down.