On 15 April 2025, the English Court of Appeal gave its reasons for dismissing an appeal against an interim £3 billion restructuring plan for British utility company, Thames Water, avoiding a special administration of the company.

Background 

The interim plan, sanctioned by the High Court (using its cross-class cram down powers) (see our Alert), provides the company with new funding to allow it to avoid insolvency and continue vital public services whilst a second restructuring plan is negotiated to take place by September 2025.

Certain junior and subordinated creditors and a Member of Parliament appealed against the sanction of the plan on grounds that it was unfair and not in the public interest. 

Decision 

The appeal was dismissed subject to a minor amendment to the plan to exclude releases of potential claims against directors and advisers by insolvency officeholders/special administrators.

Key takeaways

The Court of Appeal clarified a number of issues:

• 'Out of the money' creditors: can't always be disregarded when considering a restructuring plan's overall fairness.
• Benefits preserved or generated by the restructuring: can be non-monetary such as here, by preserving the company as a going concern.  
• Third party releases: can be part of a restructuring plan if they are necessary to enable its implementation.
• Public interest: it is not for the court to consider if a plan or special administration will better serve the public interest.

The Thames Water decision highlights the flexibility of restructuring plans and cautions that guidance from previous cases may not always apply.

Companies looking to restructure should seek early advice on a plan, allow sufficient time for negotiations and for the court to consider any challenge, the Court of Appeal noted that the judge in this case had been put under unacceptable time pressure.

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.

Kington S.A.R.L., Thames Water and another -v- Thames Water Utilities Holdings and others [2025] EWCA Civ 475