Burness Paull’s market-leading restructuring and insolvency team advised garden centre group Dobbies on Scots law aspects of its restructuring plan, which was sanctioned by the Court of Session on 9 December 2024.

The plan is part of a wider restructuring which will see Dobbies amending and restructuring its liabilities (including certain secured debts and leasehold liabilities), introducing new funding, and implementing an operational turnaround strategy.

This is only the second restructuring plan to be sanctioned by the Scottish Courts, and the first instance of the ‘cross class cram down’ mechanism being implemented to impose the terms of the plan on those plan creditors who failed to approve the plan at voting stage (namely landlords and certain general property creditors).

Restructuring plans were introduced as part of significant legislative reform that updated and enhanced the UK’s legal framework for corporate restructuring. The process was introduced under the Corporate Insolvency and Governance Act 2020 during the Covid pandemic. 

A restructuring plan, allows a company in financial difficulty to propose and seek the court’s sanction of a compromise or arrangement with its creditors to eliminate, reduce, prevent or mitigate the effect of its financial difficulties to enable it to continue as a going concern and hopefully avoid insolvency proceedings being commenced.

An important difference between a restructuring plan and other insolvency solutions like schemes of arrangement and company voluntary arrangements (previously the tool of choice in England & Wales for restructuring retail businesses facing distress) is the ability to invoke something known as ‘cross-class cram down’. This feature of a restructuring plan allows the court to impose a plan on dissenting creditors provided the court is satisfied that (i) none of those dissenting creditors would be worse off under the plan than they would be in the ‘relevant alternative’ (i.e. the likely scenario were the plan not approved); and (ii) the plan has been approved by 75% in value of a class (or classes) of creditors who would receive a payment, or, have a ‘genuine economic interest’ in the company in the event of the ‘relevant alternative’.

The Burness Paull team advising Dobbies on the Scots law matters was led by Allana Sweeney, partner (restructuring and insolvency) and Gary Moffat, partner (dispute resolution).

Allana said: “We are pleased to have supported Dobbies in conjunction with its wider advisors in securing the sanction of the court for its restructuring plan, which is expected to return the business to profitability and ensure its long-term future.

“Since introduction in 2020, we have seen significant use of restructuring plans in England & Wales to restructure distressed businesses, however, we have seen limited use of them in Scotland to date. We are seeing increasing interest in restructuring plans being used to effect the restructuring of businesses operating in Scotland across a number of sectors and we look forward to seeing how use of this tool evolves.

“While restructuring plans are rooted in UK law, it’s worth remembering that any company with a registered office or interests in Scotland that undertakes a restructuring plan will require Scots law advice due to certain key differences in law and court procedure.”

If you require legal advice around restructuring plans, or other corporate restructuring or insolvency matters, please do not hesitate to get in touch with our restructuring and insolvency team.

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