The High Court has refused to sanction the restructuring plan proposed by Waldorf Productions UK (“WPUK”), a North Sea oil and gas producer, on fairness grounds, despite the "no worse off" test being satisfied. 

This decision is the first major refusal on fairness grounds since the Court of Appeal’s recent guidance in Re AGPS Bondco Plc (Adler), Re Thames Water and Re Petrofac and provides important clarification on the evidential and negotiation standards expected, especially where dissenting out-of-the-money creditors are involved. 

Plan companies that do not engage in good-faith negotiations with all stakeholders and propose a plan that does not fairly share the benefits of the restructuring, but rather offer token or de minimis payments to ‘out-of-the-money’ creditors or make offers on an arbitrary basis, run a significant risk that the Court will refuse to sanction the plan. 

The burden of proof of establishing fairness is on the plan company and the proponents of the plan.

WPUK has made clear that it intends to appeal and to apply to ‘leap-frog’ to the Supreme Court.  

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