Valuation, the 'relevant alternative' and the 'no worse off' test in UK Part 26A restructuring plans: court guidance on disclosure, cross-class cramdown and challenging valuations

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

Need for valuations

The valuation test sits at the heart of deciding (i) whether a restructuring plan (RP) forced on dissenting classes via cross-class cramdown (CCCD) is fair, and (ii) what outcome the relevant alternative would produce for creditors/members if the RP is not approved.

When the RP mechanism was introduced through the Corporate Insolvency and Governance Act 2020 (CIGA 2020), the government acknowledged that valuation is frequently a flashpoint in restructurings (see Practice Notes: Types of valuation for R&I lawyers and Where the value breaks and negotiating strength). The design aims to strike the best possible equilibrium between safeguarding creditors’ interests and limiting disputes.

In practice, the government considered that, in many situations, ongoing dialogue and bargaining between a company and its creditors would narrow gaps in perceived value of the company sufficiently to avoid challenges. The government’s purpose is to reduce the chance of challenge as far as possible, whilst preserving the creditor protection that such a safeguard is intended to provide (see paragraph 5.172 of the government’s 2018 response)...

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Web page updated on 22/05/2026

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