Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Insolvency definition

What does Insolvency mean? In practice, insolvency describes a financial state where a debtor cannot meet liabilities when due, triggering remedies such as administration, liquidation or bankruptcy and informing directors’ duties and avoidance claims. For companies in England & Wales, Scotland and Northern Ireland, the Insolvency Act 1986, s 123 sets two alternative tests: - Cash‑flow insolvency: an inability to pay debts as they fall due. The inquiry is practical and forward‑looking, not confined to today’s bills (Re Patrick & Lyon Ltd [1933] Ch 786; BNY Corporate Trustee Services Ltd v Eurosail [2013] UKSC 28). - Balance‑sheet insolvency: liabilities (including contingent and prospective liabilities) exceed assets on...

UK Part 26A restructuring plans: pension scheme creditors, TPR/PPF notifications and voting, PPF mitigation, cross-class cram down and PSA 2021 criminal exposure

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

Since 26 June 2020, companies have been able to use Part 26A restructuring plans under the Corporate Insolvency and Governance Act 2020 (CIGA 2020). Implementation is underpinned by the applicable Practice Statement (see Practice Note: The Practice Statement for Part 26 schemes and Part 26A restructuring plans (2025)) and by Explanatory Notes issued by the Department for Business, Energy and Industrial Strategy (now the Department for Business and Trade). These provisions represent a permanent reform of the UK’s restructuring and insolvency regime and a valuable addition to its toolkit.

What are the practical implications?

The Part 26A restructuring plan equips distressed, yet fundamentally viable, businesses with the means to pursue a rescue. It enables a company to bind all creditor classes-junior as well as senior-even where they vote against, by deploying the cross-class cram down (CCCD) mechanism. The court may impose that cram down so long as dissenting classes are not worse off than in the relevant alternative (see Practice Note: Cross-Class Cram Down under a Part 26A restructuring plan). Defined benefit schemes are unsecured creditors, which means they usually rank...

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Web page updated on 27/05/2026

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