Jurisdiction(s):
United Kingdom

Petrofac: England and Wales Court of Appeal tightens fairness scrutiny of Part 26A cross-class cram down—surplus allocation, new-money returns, and the no-worse-off test

Published on: 21 August 2025

Published by a Law360 reporter

Legal News

Article summary

Saipem SpA v Petrofac Ltd [2025] EWCA Civ 821

As only the third appellate ruling under the Companies Act 2006, Part 26A, on restructuring plans, this Court of Appeal case offers material direction for practitioners. Patrick Schumann, partner; Jonathan Swil, partner; and Ben Gray, trainee, all at King & Spalding International LLP, examine the far‑reaching consequences of this seminal ruling for restructuring law, particularly the standards of fairness in corporate reorganisations and how courts will assess future plans. The court reiterates that the core function of the cross‑class cramdown is to neutralise an unwarranted veto by hold‑out creditors; it is not a mechanism for supportive creditors to capture an inequitable portion of the restructuring upside. Petrofac, a worldwide oilfield services group employing over 8,000 people, operates via more than 100 entities in 30 jurisdictions. Before proposing the plans, it had come under intensifying financial strain after a succession of developments, including a major Serious Fraud Office probe and the coronavirus pandemic. In essence, Petrofac’s plans contemplated an injection of fresh capital, a sizeable debt‑for‑equity exchange, and the near elimination of liabilities owed to its joint venture as outlined in the plans, in broad terms and at a high level only...

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