The English High Court has sanctioned the restructuring plans proposed by the Virgin Active group following a hearing contested by a group of the gym chain’s landlords. The decision represents the first use of the restructuring plan procedure, introduced during the summer of 2020, to restructure a lease portfolio, demonstrating the utility of the tool for debtors when implementing a significant restructuring across the capital structure, and as an alternative to the much-used company voluntary arrangement.
In the third of a growing number of cases to utilise the English Court’s new power to sanction a plan notwithstanding its rejection by a dissenting class of creditors, Snowden J sanctioned the inter-conditional plans of three Virgin Active group companies, despite the objections of five classes of creditors (out of seven in total for each company). Snowden J’s judgment provides important guidance on the Court’s exercise of its discretion to cram down dissenting classes of creditors and provides valuable insight into the Court’s approach to the valuation disputes that will likely be the key battleground in future restructuring plans.
