Waldorf: English Court Approves Second Restructuring Plan, Despite HMRC Opposition

At a Glance

The English High Court today (5 May 2026) handed down its judgment approving the restructuring plan of Waldorf Production plc, despite opposition from the UK tax authority, HMRC. The plan facilitates a $205 million sale of Waldorf to Harbour Energy (a listed oil and gas company), conditional upon the full settlement of Waldorf’s existing debts via the plan.

In parallel, the Scottish Court today (5 May 2026) approved a restructuring plan in respect of a Scottish company in Waldorf’s group, with a reasoned judgment to follow. 

This decision follows the court’s refusal to sanction a previous restructuring plan proposed by Waldorf (RP1) — see our Alert, August 2025.¹

HMRC may seek permission to appeal; we expect that any such appeal would most likely be heard directly by the Supreme Court.

This decision marks the first cramdown of HMRC following the Court of Appeal’s trilogy of restructuring plan judgments (Adler, Thames Water and Petrofac), with the focus on the fair allocation of benefits of the restructuring.

HMRC raised various jurisdictional, statutory and discretionary objections to the plan, essentially arguing that: 

• Tax Losses: the very extensive tax losses within Waldorf group, which were an asset that Harbour wished to acquire and use to shield its profits from tax, should be taken into account for the purposes of the “no worse off” test and as a matter of the court’s discretion; and 
• Unfairness / Abuse of Process: it was unfair and an abuse that Harbour — which could pay the plan company’s outstanding c.$94 million tax liabilities under the Energy Profits Levy regime² (the EPL Liabilities) — be able to acquire those valuable tax losses, while insisting that the EPL Liabilities be extinguished (albeit with a payment of 14% of the debt under the plan), and that the restructuring plan regime was being used to avoid a lawful tax liability. 

Rejecting all of HMRC’s objections, the court held:

• Compromise of HMRC: there is no jurisdictional bar to the court exercising its cross-class cramdown power against HMRC, even where HMRC has rationally decided to oppose a plan; HMRC’s opposition is to be accorded great weight, but it does not have a veto; 
• No Worse Off Test: HMRC would be better off under the plan than in the relevant alternative; Harbour’s utilisation of tax losses was not part of the existing rights being compromised by the plan and was therefore not relevant to the statutory no worse off condition to binding a dissenting class; and
• Fairness: while recognising that the tax losses were intimately bound up with the deal, the losses were not necessarily a “contribution” from HMRC; they could instead be considered “benefits preserved or generated by the restructuring”. In all the circumstances, it was fair to approve the plan, notwithstanding HMRC’s objections (including as to the plan company’s past conduct). 

Mediation: This was the first UK restructuring plan to involve mediation. The mediation successfully resolved the opposition of Capricorn, an unsecured creditor in respect of an M&A settlement claim which had opposed RP1 along with HMRC. HMRC declined to participate in the mediation; the court was unconvinced by its reasons for doing so.

For full details, see our deck. 

^{1. The Supreme Court granted Waldorf permission for a ‘leapfrog’ appeal (i.e., without being heard by the Court of Appeal); however, Waldorf withdrew that appeal in favour of pursuing a sale to Harbour in conjunction with this second restructuring plan. ↩}

^{2. The EPL regime represents a windfall tax on the profits of North Sea oil and gas companies. ↩}