New Fortress Energy, Fossil Group and Argo Blockchain are putting English restructuring plans on the map for US-listed borrowers. What draws them across the Atlantic, and what does that choice mean for creditors?
Will Macadam joins Linklaters restructuring partners Michael Torkin and James Warboys to break down how the US’s more comprehensive Chapter 11 bankruptcy process compares to the England’s more targeted Part 26A restructuring plan.
The discussion touches upon what companies can do with a Chapter 11 filing that cannot be achieved with an English Part 26A and vice versa, why Part 26A plans have proven popular with some publicly-listed US companies, and how advisors decide where a distressed company should restructure its liabilities.
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Episode Transcript
This transcript was generated with the assistance of AI. For any inconsistencies, please send a note to podcast@9fin.com.
William Macadam
Forum shopping is as necessary a skill for restructuring professionals as knowing a prime cut from a secondary cut is for a chef. Over the years, bankruptcy courts in Delaware, New York, Texas, and New Jersey have fallen in or out of favour as troubled American companies hunted for the greatest certainty of implementation and the bleeding edge of jurisprudence.
That competition appears to have become transatlantic, as England's Part 26A restructuring plan, which was only introduced a few years ago, has surged as an alternative to filing for bankruptcy in the US. Energy infrastructure specialist McDermottInternational was one of the first American companies to effectuate a debt restructuring under the new English process back in 2024.
Since then, the list has grown to include several publicly listed businesses, crypto miner Argo Blockchain, watchmaker Fossil Group, and natural gas group New Fortress Energy. On the face of it, a chapter filing provides debtors with a much more expansive toolkit to deal with their liabilities compared to a UK restructuring plan. But both processes do have some features in common.
To unpack why some American firms are choosing to use restructuring plans over Chapter 11, I'm delighted to be joined by Michael Torkin, Linklater's US head of restructuring, and James Warboys, a London-based partner in the firm's restructuring practice.
Michael Torkin
Fantastic to be here this morning with the 9fin team. Thanks for having us, Will. James and I thought we'd use our time to compare two tools we spend a lot of time thinking about when we're presenting options to a board of a financially stressed issuer. Chapter 11 in the US and the UK's Part 26A restructuring plan, what we generally refer to as an RP.
James Warboys
Great to be here. Thanks, Will and Michael. So look, the point here isn't that one regime is better than the other. They're just built differently. The interesting question is, what can each actually do, where the trade-offs sit, and why cross-border situations increasingly get the choice between them.
William Macadam
I think probably the best place for us to start is to unpack some of the key mechanical differences between the two processes.
James Warboys
Happy to pick up. Chapter 11, in our mind, is basically a Swiss Army Knife. There's lots of functionality, and everyone in the room roughly knows how it works because it's been sharpened with over 40 years of case law. The restructuring plan, on the other hand, is more like a scalpel, much more precise, less invasive, but it can't do everything.
William Macadam
So as we're recording this in New York, why don't we start with Chapter 11?
Michael Torkin
Thanks, Will. Chapter 11 is a full corporate procedure. It's genuinely all-encompassing. Although it could, it doesn't just touch the debtor's financial debt. It can touch its leases, contracts, trade creditors, tort claims, and even pension liabilities. And on top of that, it has special powers that we refer to as avoidance actions to claw back certain transfers before the bankruptcy. It's one proceeding and everybody's in it. That's the one-stop shop feature. And it's really powerful when you've got a business that needs an operational refresh, not just a balance sheet overhaul.
Most importantly, the debtor remains in possession. So the management and the board chart the course for the restructuring with an initial 120-day exclusivity period to file a structuring plan. And that period is routinely extended for up to 18 months. Add to that the ability to incur super senior priming dip financing, as well as the broad global automatic stay that freezes all creditor action. And you can see why debtors and even sponsoring creditors or acquirers appreciate the process.
Also, I'll touch on this in the RP context as well. There's cross class crammed down. So in that context, you need at least one impaired class of creditors to accept a plan, excluding insider votes for that accepting class. And a class accepts with two thirds an amount and more than half a number of those voting. And if other crammed down tests are met, you can bind junior classes. And that's where the absolute priority rule actually kicks in from the Chapter 11 perspective. Broadly speaking, junior interests can't get value ahead of a dissenting, impaired, unsecured class, unless that class is paid in full. Underneath it all, you've got decades of experience, equality, judiciary, and case law certainty. So when the board or the general counsel asks, what happens if in Chapter 11, there's usually an answer that you can give with a high degree of certainty and predictability?
William Macadam
James, how does Part 26A stack up against that?
James Warboys
Part 26A is nowhere near as intrusive as Chapter 11. It's much more surgical. It lets you restructure one or more debt instruments without touching the rest of the business. The broader releases mean that you can restructure debt across the entire cap stack by just filing a single plan company instead of each obligor. The one gap though is that there's no automatic stay, and we'll come back to talk about that in a bit. The voting works differently. Seventy-five percent by value of those present and voting in a class, but there's no numerosity test, unlike an English law scheme of arrangement, which needs a majority in number as well as 75% in value. Dropping that headcount requirement means a single class plan becomes far more workable, and that was utilised successfully in Fossil's Part 26A.
Fairness in an RP comes down to the no worse off test against the relevant alternative, which is basically, would creditors do better in the counterfactual, which is often insolvency, although that has increasingly been scrutinized. Critically, there's no absolute priority rule in a restructuring plan. Junior creditors or shareholders can get returns under the plan subject to the court's fairness analysis, which may not be possible in a Chapter 11. And that one feature is hugely useful for sponsors because it means that equity can seek to keep a slice of the pie, even when, strictly speaking, they're out the money.
On timing, the two regimes aren't as far as par as people often think. For an RP, typically it's eight to 10 weeks from filing through to sanction, although this can be significantly longer if the plan is challenged and often months of prep work is needed before you file. The timing of Chapter 11 depends on the extent of the preparation and the extent of creditor support. Roughly one to two months from filing to emergence for a pre-packaged case, four to six months for pre-packaged cases where a restructuring support agreement is in place. And then nine to 18 months on average for three, four cases where there's no pre-negotiated deal.
Michael Torkin
And James, I don't know if this has been done in the UK yet, but a few years back, I did one of the first pre-packs that was done in six days. We were in and out within six days when there was extraordinarily high degrees of consensus. We had one minority holder that was holding up the case. It was a foreign entity that for their own internal purposes needed a court order to approve it. So these things can be done in some unique circumstances in under two weeks if there is significant prep. Is that something that could get done in the UK?
James Warboys
No, that's not possible in the UK because you need to give the represent notice for the creditors meeting and you need the two court hearings, the convening hearing and the sanction hearing. So the quickest that you can do an RP is probably eight weeks, excluding all the preparatory time.
William Macadam
And so if we're boiling down the differences between the two processes, what's the essentials here?
James Warboys
So the gist of it is this. Chapter 11 gives you the full operational toolkit. There's DIP financing. There's a genuine automatic stay on creditor action. There's the ability to bind a really broad group of stakeholders into a single proceeding, whereas the RP gives you precision. There's no absolute priority rule. There's broader releases and a much lower bar, arguably, for cramming down a dissenting class. But neither process is better in the abstract. They're built to solve different problems. And we spend the rest of this conversation, getting into the circumstances in which each of the processes earns its keep.
William Macadam
So in my intro, I've gone over some of the names of recent US to UK restructuring plans, but could you guys break down some of those examples for me?
Michael Torkin
Sure. And from an outsider's perspective, it probably seems like there's a genuine run of these right now. And it's worth being precise about each one because they're not exactly identical stories. So you can start with Argo Blockchain. It used its existing English PLC directly as the planned company. And it's the one case in the group that actually needed a cross-class cramdown. Then there's Fossil, which used a newly formed UK company as a guarantor combined with a change of governing law and the debt instruments and ran a single class process. So no cram down was needed. And we'll talk about some of the nuances of that case in a bit. And then there's New Fortress Energy. By some distance, the largest of all of these cross-border RP transactions, it involved two UK plan companies, one of them Anuko, addressing $6.5 billion owed to external plan creditors. NFE, importantly, did not need the cram down. Six of the seven creditor classes voted unanimously, and the seventh, the legacy note holders, voted almost unanimously 99.84% in favor of the plan.
William Macadam
Right. And so when we're looking at these restructurings, what would you say stands out?
Michael Torkin
So what stands out is that NFE, after Fossil and Argo, where the Part 26 restructuring was implemented, well, the NASDAQ listing was actually preserved. In NFE, the key point was structural. The RPs were promoted by two indirect subsidiaries. So the NASDAQ listed parent itself stayed outside of the process. NFE Brazil Newco was incorporated in UK specifically to promote the Brazil Newco plan. Well, NFE Global Limited was already a guarantor of the relevant debt, and that gave the group a way to sort of use the English process to restructure the debt without actually having to put in the listed parent through the RP process.
The other thing I'd like to flag is these aren't small, esoteric transactions. The NFE plans were projected to deliver a combined uplift of around a billion and a half against the relevant alternative, which was actually a Chapter 11 or a distressed asset sale for one part of the group and an accelerated going concern sale for the other. And that's a really significant amount. And it tells you that this concept of using the RP over a Chapter 11 has moved past its novelty and has found its place rightfully in a restructuring advisor's toolkit.
William Macadam
And just on that point quickly, we might have some listeners in the audience who are unfamiliar with some of the terminology around restructuring plans. When you say relevant alternative, what do you mean?
James Warboys
So when we say relevant alternative, we mean what is the counterfactual to the restructuring plan not being implemented? So what is the most likely alternative? What's most likely to happen? Now, traditionally, that was an insolvency process. But more recently, actually, that's been disputed and debated before the court. Because is it really reasonable to assume that for a big cap stack, if this restructuring plan doesn't go through, the company is going to file for administration or liquidation or some other alternative insolvency, which is clearly extremely value destructive.
Alternatively there may be further negotiations with the creditors, a recutting of a deal and some kind of alternative solvent transaction, which would maximize the returns for the creditors, thereby potentially making it more difficult to demonstrate that the creditors are no worse off under the plan than they would be in the relevant alternative. So that is a component of restructuring plans which continues to develop.
Michael Torkin
And it's actually pretty interesting because the Chapter 11 process does have a similar but much weaker protection for creditors. So it's called the best interest of creditors test, which means even if a class has approved a restructuring or there is a cram down, any holder can put up its hand and say, in a hypothetical liquidation, I do better. And a hypothetical liquidation as opposed to a relevant alternative, if you compare the two, is just such a weaker standard. And it has been thought of in a Chapter 11 case that you're really talking about selling the chairs and the desks and the pencils as opposed to any going concern value. And the use of the word hypothetical before liquidation creates a lot of leniency. So even though there is this embedded protection known as the best interest of creditors test, I'd be hard pressed to find a restructuring where a creditor was able to successfully use that to establish that the plan that was being proposed and would otherwise be confirmable should not be.
William Macadam
Right. So I suppose that leads on to the really substantial question of what makes an RP more compelling than a Chapter 11 filing?
James Warboys
So I think we've touched on a number of these points already, Will. So building on those, there's a number of things that pull companies towards the restructuring plan. The lack of the absolute priority rule is a biggie. It means that it is possible for shareholders to keep their equity, even if senior debt or junior debt is being compromised. If you look at the NFE RP, the shareholders retain 35% of their equity, even though they're arguably out the money.
The broader third party releases are important. Non-consensual releases of non-debtor third parties are generally off the table in Chapter 11 following the Supreme Court's decision in Purdue. Whereas with a restructuring plan, as I mentioned, you can file a single entity. So you take an existing borrower or guarantor, and then you can compromise all of the debt across the cap stack through the per-party releases. That is subject to the RPB being recognized in each of the relevant jurisdictions where you have obligores to the extent that it's a cross-border group. But there's pretty established technology for seeking and obtaining recognition.
Then there's the numerosity point. You don't need more than 50% of the creditors in number to approve an RP. You just need 75% in value. And that's really helpful where you have a very large creditor group, particularly if you're looking to put together multiple debt instruments into the same class. And that point featured pretty heavily, I believe, in the NFE restructuring plan as well.
Michael Torkin
Yeah, it was also, I think it was in the Fossil plan where they had to go and get a bunch of retail holders. So it would have been a challenge. But also think in one of the cases, James, you and I recently worked on, there was a dissenting creditor who had numerous, numerous funds opposed to some significant creditors that held concentrated positions in a couple of funds. And it really raised a lot of questions on could you have a holder of 5% of the debt across 50 different CLOs, which are technically each individual holders, hold up the plan because you don't get numerosity. So there will be circumstances, certainly in the retail world, where people do vote because in bankruptcy, numerosity, in Chapter 11, the numerosity is only relevant with respect to those voting. You could see the ability to create some mischief there.
William Macadam
It's been touched on in some of the comments you've made about some of the recent restructurings, but it seems as though there's been a large number of publicly listed US companies coming to the UK. What's driving their choice?
Michael Torkin
Yeah, it's interesting. At first, I think there's a little bit of a misconception. Chapter 11 does not automatically mean delisting. I've looked back at a number of public company Chapter 11 cases over the last 20 years and found there are a number of issuers that have stayed listed throughout the case, but the clean full case precedents we all found were NYSE cases, which could be a little bit different rules than NASDAQ. And for example, PG&E, the California public utility is probably one of the best known cases where it remained public throughout. And so the NASDAQ precedents were thinner. The NASDAQ rule 510B does give NASDAQ significant discretion to suspend or terminate after a bankruptcy. So even if the company otherwise meets the ordinary continued listing tests, the NASDAQ has the ability to delist. And I would suspect the same is true for the NYSE.
But the recent RPs are interesting because listing did matter. And so I think people were structuring it in a way that may have been easier for the NASDAQ not to exercise their discretion. And so Argo is the cleanest example. The NASDAQ listing was actually a condition to the viability of the restructuring. That's what I understand. And it influenced the economics of the deal. The equity allocation had to leave enough value and public float with public holders to satisfy the listing requirements. Fossil was a little bit different. There, the problem was retail holder base and the Chapter 11 numerosity test, which we talked on just previously. So preserving the NASDAQ listing was a really important benefit, but that was achieved structurally by keeping the US parent out of the RP process and using a UK subsidiary.
So it's unclear to me necessarily that the RP was that helpful and they couldn't have talked to NASDAQ, but it happened to be a feature of the plan. And NFE sits somewhere in between the two of them. The restructuring, the post restructuring capital structure was built around new NFE remaining a publicly traded company and NASDAQ approval and listing mechanics were important part of implementing the deal.
But like I said, continued NASDAQ listing wasn't framed as the same kind of absolute viability condition as it was in Argo and is probably that was needed in Fossil. NFE, I think, illustrates the equity retention point that James mentioned, Judge Glenn focused on the fact that the existing shareholders retained 35% of the equity, because that sits awkwardly with the US absolute priority rule. And part 26A, no worse off test, as James has said, provides more flexibility when there's a legitimate commercial rationale. And here, the equity structure was part of getting the NASDAQ and Delaware approvals needed to implement the deal.
So just taking it back, I wouldn't say that these companies use an RP just because they were NASDAQ listed. It mattered, but each case had a different deal problem that the RP helped. And I think the listing was a benefit. So is it a trend? I don't know that I would call it a trend. It's more of a case of the right tool being used for the right job. Judge Glenn's written opinion places NFE alongside Fossil, Mega Newco, and Codere as part of a recognized pathway rather than sort of a novel workaround. And he actually noted that the US-based companies are increasingly looking to English law to complete balance sheet restructurings. But I'd still, I think I'd resist calling it inevitable or automatic. Each of these involve deliberate bespoke structural engineering, governing law changes, UK new codes, and sometimes real questions about where the company's Comey sat.
William Macadam
So if we're to break down how the process of venue selection actually works, both from the philosophical angle of which jurisdiction gets chosen, and then the practical angle of implementing the deal, can you guide me through how that process works.
James Warboys
Philosophically, the starting point is that advisors look at all of the options and build a legal structure to deliver the outcome that the client actually needs. You're not out there promoting one regime over another per se. The real differentiator in our mind between advisory teams is cross-border fluency. Can you actually navigate smoothly across jurisdictions and bring the whole toolkit to the table. And in doing that, create optionality for your clients.
But in practice, there is a checklist that you run through. What type of fix does the business actually need? Is it purely a balance sheet fix or does there also need to be an operational toolkit? What does a creditor base look like? Is numerosity test an issue? Do you need broad third party releases? Is equity retention important? What's the governing law of the debt. That becomes central to issues of recognition and the ability to compromise English-governed debt through a foreign process. How much does speed matter? What does the cost actually look like on the facts? How contested is a process likely to be? And how novel is a solution, looking towards the very extensive jurisprudence under the Chapter 11 regime?
William Macadam
And Michael, what about the practical perspective?
Michael Torkin
So, yeah, it's practical and it's legal all at the same time. And I would say once you've landed on jurisdiction, implementation still needs to work under the governing law of the debt. So NFE is a good example of that. The plan debt and the principal implementation documents were governed by New York law. And so the English court wanted comfort, needed comfort, that the transaction it was going to sanction could actually be implemented under New York law. And it took comfort from the fact that the documents have been negotiated and drafted by multiple sophisticated firms with substantial New York practices, acting for creditor groups across the capital structure.
So forum choice is half the job. And then you need to make sure that there's implementation mechanics that work under the relevant governing law and actually hold up to scrutiny in both London and New York. James and I faced this issue in the Lycra restructuring and had what I would consider a pretty unique means of delivering restructured equity to the creditors in that case that actually did not require a foreign law proceeding. But the Chapter 11 plan was predicated and necessitated on non-bankruptcy corporate trust law working outside of its regime to get something done. And that was a prominent feature of that plan.
So practically, what does it actually mean? It means that for Linklaters and James and my practice, the partners are engaged together from the outset, folks in the UK, folks in Netherlands, folks in the US. And we really canvas all of the issues to not only get the right regime for the client and the new owners in terms of protections and efficiency and timing, but most importantly, you need to make sure that there is a path to get out that can get implemented with the least number of restructuring regimes at play.
So the goal for us is always to use the right regime for the client's actual facts, not to promote one jurisdiction because that's where a larger group of partners may sit. It just happens to be, it just needs to be the right legal framework for the set of facts before us.
William Macadam
And just to carry on this point just a little bit more, how common is English law governed documentation for some of the American issuers in the market.
Michael Torkin
You would have to most likely have a significant presence in London to have it. So it's not that it's mostly European companies with English law or Middle Eastern companies or a non-US issuer that has that pound exposure than necessarily a true US domestic company with English law govern docs. That's going to be rare. I know, James, if you have a different perspective.
James Warboys
No, I mean, looking at it from a European perspective, there's a lot of US government law debt. But what you do sometimes see, actually what you commonly see is an English law governed intercreditor agreement that regulates the priorities of the different US governed debt instruments. And that can create an issue because if you're using a non-English law process to compromise that debt, is that effective in terms of amending the rights under the intercreditor, taking into account the Gibbs principle, which basically provides that you can only compromise an English law contract using an English law statutory process. And that's quite an interesting debate that is actually currently live in at least one situation in the market.
Michael Torkin
Yeah. And you raised a good point about the intercreditor agreement. I mean, that's another challenge we sometimes find where there's US and UK law governed debt, but the intercreditor agreement happens to be UK. Oftentimes those intercreditor agreements don't fit sharply and nicely within the US jurisprudence for approving a DIP financing, voting on a plan, adequate protection, priming, all sorts of issues that we find ourselves having to navigate pretty heavily in order to get to a reasoned result. And I do think that there's going to be at least an increasing number of UK intercreditors that would incorporate some of the US concepts so that if there is a restructuring, people aren't hamstrung by the document and it would allow them the flexibility of being in one regime over the other.
William Macadam
So to step back into the decision-making process and the choice between a restructuring plan or Chapter 11, I'm curious how legal costs also factor into the decision.
James Warboys
It's a good point. And the discrepancy in the cost between the two regimes is real, But I do think it is narrower than most people may assume. There's been some pretty expensive restructuring plans on account of the challenges that have been launched in the UK. But the difference is driven by very specific structural features rather than one regime being more efficient than the other.
The biggest driver is who pays for a fight. So in a Chapter 11, the US Bankruptcy Code generally requires an official committee of unsecured creditors to be appointed. And the debtor's estate is responsible, subject to court approval, for paying for those costs. And they can be extensive because there's counsel, financial advisors and investment bankers. Also in the US, informal ad hoc creditor groups tend to be paid for by the debtor under the contractual provisions of the underlying credit agreements. So in Chapter 11, stakeholders who may disagree with the plan that the debtor is promoting are litigating against it at its own dime. And that is expensive.
The English position is a little different, but it can cut both ways. The English restructuring plan does not provide for formal committees or any statutory equivalent of an estate funded creditors committee. So it sounds like it would be cheaper for the company, and often it is. It's also worth noting that if stakeholders want to challenge a restructuring plan, they face the prospects of incurring significant out-of-pocket expenses, which may be unrecoverable from the debtor. Although actually, in certain instances, the English court has been pretty amenable to reimbursing all or a portion of those costs to the extent that the challenge is deemed to kind of legitimately test or kick the tyres on the restructuring plan.
William Macadam
The good old English tradition of the loser pays. Yeah, exactly.
James Warboys
I think the loser pays, that's the general principle. But in the first instance, the English courts have been, I think, a bit more amenable than some market participants might want in terms of obliging the debtor to fund the costs of the challenging creditor. But, you know, the challenge does need to have some merit on the face of it.
William Macadam
But I gather costs aren't the only calculation here. How do the evidentiary standards of the two processes stack up?
James Warboys
Disclosure and discovery is another real driver. Chapter 11 gives creditors very broad ranging rights to obtain discovery in a contested plan. There's wide document production, deposition, testimony of the debtors management and other financial professionals. RPEs are increasingly being challenged. But to some extent, this is to be expected as a case law around the implementation of a cross-class cramdown settles and develops. The RP is still a relatively new tool in the grand scheme of things.
However, you would not typically expect detailed disclosure in relation to disputes and spurious litigation in the UK. Valuation litigation itself is much more institutionalized in the US. In RPs, challenges in contested cases tend to focus on the selection of the relevant alternative and the proposed recoveries under it. It's still pretty uncommon to see a full valuation dispute with competing expert evidence. So the discrepancy is real, but it's not that one process is inherently cheap and the other inherently expensive. It's just that Chapter 11 has built-in cost mechanisms that fund opposition and do demand extensive evidence, while the English regime tries to narrow the scope of disputes. But as I said, the court will exercise discretion over the level of costs borne by the plan company.
William Macadam
So we've been talking about the costs of a Chapter 11 process, and I'm curious what's being done by advisors to kind of optimize those costs here in the US.
Michael Torkin
Look, I think the ability to optimize costs in the U.S. Are basically opening the playbook to your adversary and your client. So if you're a first lien, being very frank about liquidity, being frank about case costs. And James and I know very well that the new owners of the business were very conscious of the delta between the cost savings of a prepack, not reaching consensus, capitulating on positions that they felt very entrenched and strong on. And sometimes it does require taking a deep breath, passing on a legal issue that you may feel very strongly about in order to share some of the cost savings of a fully protracted case where a committee could get put in place with the expediency and cost savings associated with a prepack.
And I do believe that part of our job, in addition to providing really precise legal advice on the merits and working alongside the restructuring advisors and financial advisors on a lot of data, sifting through a lot of data on case costs, being part psychologist and really helping the clients move past a legal position to realize that the cost savings will be dramatically better. If we can get to a pre-pack or pre-arranged case. The cases that are not organized from the outset just run the risk of extraordinary costs. And so I would say the optimization comes up front by educating the clients and keeping people on task and also narrowing that timeline if there's a liquidity situation facing the company.
William Macadam
And now if we turn back to the restructuring plan for a second. It's not quite the case that it's leaner, greener and meaner than in a Chapter 11. There has been some changes to case law and in particular the sort of fairness analysis has been sharpened. James, would you say that's impacted the RP's reliability to carry out larger and sometimes contentious restructurings?
James Warboys
So I would say that some of the recent case law and the uncertainty which has arisen from has actually made ERP more rigorous rather than less reliable. So we're over a year now from Petrofac, which a lot of people saw as a real blow to the regime. But in our mind, the restructuring plan has actually come out stronger rather than weaker as the market has adapted to the heightened judicial scrutiny.
Post-Petrofac decisions recognize that when you're assessing the fairness of how benefits are shared, contributions to those benefits need to be ranked, not simply netted at face value. So increasingly, the court will take into account the ranking of the debt when it's trying to judge the fairness of the plan in terms of the allocation of the restructuring benefit. What a class gives up and how important it is to the plan now matters more than the nominal value of the claim. So for example, the provision of new money is generally seen as much more valuable as a contribution than the release of an unsecured claim.
So Petrofac made it clear that out-of-the-money contributions can't simply be ignored. But the subsequent case law has confirmed that in-the-money contributions still weigh more heavily. Several recent examples have also shown that commercial and strategic importance of claims can entitle a class to more than its notional share. So you can look at softer contributions to the restructuring, such as turnaround experience, and it's harder to put a precise figure on that value. But the practical upshot is that plan companies need to front load their evidence. Plan benefit reports are becoming market practice, and you need credible evidence on the pricing of new money.
Similarly, I think you need to go into a restructuring plan with a more litigious mindset from the outset. To the extent that you're implementing a cross-class crammed down, you have to expect rocks to be thrown at the plan. And therefore, you need to anticipate robust and creative arguments from various stakeholders. But the case law is settling. In our mind, a restructuring plan remains an extremely powerful tool. And we're pretty bullish on it as an instrument to implement a restructuring.
William Macadam
So we've gone through the kind of nuts and bolts of these US to UK restructurings, but we haven't really covered the last and perhaps one of the most important steps, getting a decision from London recognised in the US. Could you guys take me through how that process works and how it shapes deals, given the asymmetries between the two regimes?
James Warboys
So there is asymmetry. A Chapter 11 plan that purports to compromise English government law debt will not be binding on creditors as a matter of English law because of the Gibbs Principle, which I referred to earlier. But then on the other hand, a Part 26A plan, which compromises New York or US government law, should be recognized in the US under the Chapter 15 regime, subject to some of the commentary that Mike will come on to talk about.
Michael Torkin
Yeah, thanks, James. So the process itself, and we can use NFE as a recent illustration, starts with the English court sanctioning a plan. Then you go to the US bankruptcy court to seek recognition under Chapter 15, section 1517 of the bankruptcy code is the gateway. If the statutory requirements are met, the English proceeding can be recognized as a foreign main proceeding if that's the case. But recognition is only one step and Chapter 15 isn't shouldn't be the rubber stamp that frankly, at one point people thought it would be. But as these cases proliferated, the judges became much more focused on Comey.
In fact, when Chapter 15 first came out, I felt like there was a deeper dive into Comey. Then there was a period of time where it did feel more rubber stamp-y, even though judges, you know, relied on the papers that established it. But clearly now, as globalization has taken a stronghold in these restructurings, judges are certainly much more apt to even Sua Sponte dinging into the claims for Comey and establishing foreign main proceedings. And really, Judge Glenn's questioning at the recognition hearing wasn't just procedural formality. He was focused on whether any creditor had been disadvantaged by restructuring in the UK rather than in the U.S. Under Chapter 11 and press counsel to confirm that the U.S. Process wouldn't have produced a better result for legacy holders who were projected to receive a pretty small recovery under the restructuring plan and against the relevant alternative.
I'd say in his opinion, Judge Glenn separated recognition from enforcement. Section 1522, sufficiently protected requirement together with the fairness standards in section 1507 are the principal creditor mechanisms when the court is asked to grant discretionary relief. And in NFV, the discretionary relief was important. The debtors wanted the U.S. Court to give the English sanctioned orders and plans full force in effect in the U.S., including the plan releases, which was to enjoin creditors from pursuing claims here that the plans had compromised. And 1521 and 1507 are what give the court that discretionary authority to grant that kind of relief, subject to 1522.
And then importantly, Section 1506, that sits outside of all of the public policy as the public policy backstop. And even otherwise, available relief under 15 can't be granted if it would be manifestly contrary to the public policy of the United States. But that's a deliberately pretty high bar. The fact that a particular remedy would not be achievable in a domestic Chapter 11 doesn't in and of itself make it unenforceable under 15. So the structure is recognition, enforcement tools, ensuring creditors are protected with the overarching manifestly contrary to public policy of the United States. And that's how I would think a U.S. Court will scrutinize this.
Stepping back though many times people where comey is a bit questionable will always plead in the alternative foreign main or foreign non-main. I think that sometimes would would show your hand about a little bit of ambiguity so we'll see how the judges will continue to develop their thinking around around comey
William Macadam
Judge Glenn, in in his opinion, did warn of Comey tourism i believe is is how he puts it. Do you see that as a cause for concern?
Michael Torkin
I think the opinion is more nuanced and just the tourism soundbite. Chapter 15 doesn't bar the group from using an English process, but Judge Glenn, as we were talking about, made it clear that US courts will and should scrutinize Comey carefully, creditor expectations, and whether the structure is being used fairly. You know, you could you could move away from NFE and you could take a look at Mega Newco as another example here where Judge Wiles did recognize a UK scheme on overwhelming consensual facts. But he raised serious questions if there had been dissension amongst the creditors that that structure had been fairly used to thwart third party expectations where there really had not been any substance in the UK.
So I think the overarching thing for all of these cases and the theme is consensus, consensus, consensus, it does a ton of work. It's not the only thing I've been involved in cases where the judges, again, sua sponte, want that record developed. And I think that is a lesson for all of us to be very sharp on all fronts around the fact. So a genuinely contested case may get more, will get, not may, will get more scrutiny in Chapter 15.
William Macadam
Well, Michael, thank you very much for joining me in the studio today. And James, thank you for tuning in all the way from London. It's been a pleasure to speak to you both.
Michael Torkin
Well, it was great. Questions were fantastic. And I think the fact that James and I are actually able to talk interchangeably about RPs and Chapter 11 just demonstrates the connectedness of the two practices. That's a philosophy, not only of our practice, but of the Linklater's firm and the way we approach any complicated legal issues. So we really appreciate the opportunity to come and talk to your audience. And you guys always do a great job.
James Warboys
I fully agree with those comments, Michael. Thank you so much, Will. It's been great to speak.