Fossil and the evolving boundaries of the English restructuring plan

This article first appeared in the February 2026 issue of Corporate Rescue and Insolvency.

Key points

• Single-class restructuring plans are a credible alternative to schemes: Re Fossil (UK) Global Services Ltd (Fossil) confirms that an English restructuring plan may appropriately be used even where only one class of creditors is affected, particularly where creditor dispersion or execution risk (such as retail numerosity) makes a scheme of arrangement less attractive.
• Absence of cross-class cram down does not equate to light-touch sanction: Even where all voting creditors approve the plan, the court may go beyond a purely deferential "limited rationality" review and examine substantive features of the transaction, including voting dynamics and value allocation.

Fossil highlights the growing internationalisation of UK restructuring tools: The case demonstrates the continued attractiveness of English restructuring processes, including for companies incorporated in jurisdictions that themselves have a tested cram down tool, such as the US, where supported by a credible jurisdictional anchor and a realistic prospect of overseas recognition.  

Introduction

The High Court sanctioned the restructuring plan in Re Fossil (UK) Global Services Ltd on 10 November 2025 (the Plan). The decision marks another important step in the evolution of the English restructuring plan under Pt 26A of the Companies Act 2006 (CA 2006). While restructuring plans have now been available for several years, Fossil stands out for three inter-related reasons.

• First, the Plan involved only a single class of creditors (the Plan Creditors), in circumstances where market participants might historically have expected the use of a scheme of arrangement.
• Secondly, notwithstanding the absence of any cross-class cram down, the court applied a level of scrutiny at sanction that went beyond the orthodox "limited rationality" test.
• Thirdly, the case represents a clear example of a UK restructuring process being deployed to restructure debt that was originally under New York law by an issuer economically anchored in the US.

Taken together, these features illustrate both the flexibility of the restructuring plan and the court's approach to sanction in non-cross-class cram down cases, particularly where issues of new money, voting dynamics and forum choice arise. Fossil therefore provides valuable guidance for practitioners considering how — and how far — Pt 26A can be used as a targeted restructuring tool in complex cross-border situations.

Background: the Fossil group and its capital structure

Fossil is a US-headquartered consumer brand with global operations. By 2025, the group was facing a combination of pressures: weak trading performance following several difficult years for discretionary retail, a looming maturity wall and constrained liquidity. Although the group had implemented elements of a turnaround strategy and refinanced its asset-based lending facility, its unsecured bond maturities remained problematic.

The immediate focus of the restructuring was a single series of unsecured notes due in 2026. Those notes were widely held, with a significant proportion in the hands of retail investors, alongside two large institutional holders. This ownership profile proved central to both the choice of restructuring tool and the way in which the court approached its sanction analysis.

From the group's perspective, a US Chapter 11 filing was considered unattractive for several reasons. Under the US Bankruptcy Code, plan confirmation requires that at least one impaired class of creditors accepts the plan, with acceptance determined by both two-thirds in value and more than one-half in number of voting claims. Given the large number of retail noteholders with relatively small holdings, a few "no" votes could cause the entire class to reject the plan, creating material uncertainty when not all retail investors were accounted for. Additionally, the evolving US legal landscape further deterred a Chapter 11 process. Following the US Supreme Court's Purdue decision,^[1] US bankruptcy courts are generally unable to grant third-party releases without the consent of affected claimants. This was a significant constraint for Fossil, as the restructuring plan aimed to secure releases for non-debtor note issuers and related parties. By contrast, US bankruptcy courts have declined to apply the Purdue holding in the Chapter 15 context, and have recognised foreign restructuring plans that contain third-party releases.

An out-of-court exchange was constrained by both legal and practical considerations, including the difficulty of securing sufficient participation from a dispersed retail holder base.

Against that background, the group pursued a UK restructuring plan proposed by a newly incorporated English guarantor. The governing law of the notes was contractually changed to English law, the plan company assumed obligations in respect of the notes, and the restructuring plan was successfully used as a backstop to implement an exchange and new money transaction that had fallen short of the desired level of consensual support.

A single class restructuring plan

The Plan proceeded on the basis of a single creditor class. In practice, restructuring plans are often associated with complex class structures and, in particular, with the use of cross-class cram down, which is not available in a scheme. Where there is only one class of affected creditors, market practice has more commonly favoured a scheme of arrangement perceived as more tried and tested with decades of case law to support it.

Part 26A does not, however, require multiple classes, nor does it mandate the use of cross-class cram down. Provided the statutory conditions are satisfied (which, for a restructuring plan, include that the company has encountered, or is likely to encounter, financial difficulties that are affecting, or will or may affect, its ability to carry on business as a going concern, and that the purpose of the plan is to eliminate, reduce or prevent, or mitigate the effect of, those financial difficulties), a restructuring plan can be used even where there is only a single class of creditors.

The choice of a restructuring plan over a scheme was nonetheless deliberate. A key attraction for Fossil was the absence of a numerosity requirement. Unlike a scheme of arrangement, which requires approval by a majority in number and 75 per cent in value of those voting, a restructuring plan requires only a 75 per cent by value majority. In a capital structure dominated by thousands of retail noteholders, the numerosity test introduces a degree of execution risk that can be difficult to manage.

Fossil therefore demonstrates that, even where only one class is involved, a restructuring plan may be the more robust option where creditor dispersion creates uncertainty. It also reflects a broader trend: the restructuring plan, while still the new kid on the block, has now had five years of use and case law, meaning the distinction between the "tried and tested" scheme and the "new" restructuring plan is becoming less stark, at least outside the context of a complex cross-class cram-down scenario.

Class composition and the presence of retail creditors

Although the Plan proceeded with a single class, the court was acutely aware that this class was not homogeneous. Approximately a quarter of the noteholders by value were retail investors, with the balance held by institutional creditors. That fact did not undermine the class analysis: the court accepted that class composition turns on rights, not interests, and that all noteholders had the same legal rights against the plan company.

However, the presence of two distinct constituencies within the class informed the court's approach to sanction. The appointment of an independent retail advocate, and the emphasis placed on the clarity and accessibility of the explanatory materials, were important factors in satisfying the court that retail creditors had been properly informed and fairly treated.

More subtly, the court's reasoning reflects unease with treating overwhelming support alone as a proxy for fairness where creditors differ in incentives or sophistication. That concern feeds directly into the court's treatment of the sanction test.

Sanction without cross-class cram down: beyond limited rationality

Because the Plan involved only a single class of Plan Creditors, the court was not being asked to exercise its cross-class cram down powers under s 901G CA 2006. In principle, therefore, the sanction analysis followed the familiar framework applied in schemes and non-cross-class cram down restructuring plans.

As the court noted, following the Court of Appeal's guidance in Re AGPS Bondco plc (Adler), it must consider four questions:

• whether the statutory requirements have been complied with;
• whether the class was fairly represented and the vote was bona fide;
• whether the plan is one which a creditor acting rationally might approve; and
• whether there is any "blot" on the plan.

This mirrors the traditional scheme approach derived from cases such as Re National Bank Ltd and Re Hawk Insurance, and later reformulated in Re Noble Group Ltd.

In restructuring plan case law prior to Fossil, where no cross-class cram down was engaged, courts have generally treated this exercise as materially indistinguishable from a scheme sanction. The focus has been on what Snowden LJ in Adler described as a "limited rationality" test, coupled with the familiar inquiry into whether there is "any blot on the scheme". Absent some defect, unfairness or improper collateral purpose, the court would ordinarily defer to the overwhelming commercial judgement of an assenting class.

However, Fossil demonstrates that this deference is not automatic. Although Mr Justice Richards accepted that this was a single class and that no cross-class cram down was sought, he was careful to emphasise that the Plan Creditors could in reality be viewed as comprising "two separate constituencies": institutional noteholders and retail noteholders. While this did not undermine the class analysis — which remains rights-based rather than interest-based — it coloured the court's approach to the rationality inquiry.

Importantly, Mr Justice Richards stated that the court's willingness to apply a limited rationality test is "predicated on Plan Creditors having been given sufficient information, in an accessible way, so that they are equipped to make rational voting decisions". Limited rationality is therefore not assumed but must be demonstrated.

Against that backdrop, the court effectively introduced implicit pre-conditions to the application of the limited rationality test, examining whether the Plan involved improper value allocation, extraneous voting motivations or features requiring closer scrutiny despite overwhelming support.

This approach marks a subtle but important development. It suggests that the traditional scheme-derived framework remains the correct legal structure in non-cross-class cram down restructuring plans. But within that structure, the intensity of the court's scrutiny is variable and fact-sensitive. Fossil indicates that where there are features that would ordinarily attract attention in a cross-class cram down case, the court may deploy similar analytical tools even where s 901G is not engaged.

New money and the influence of recent case law

The clearest example of this enhanced scrutiny can be seen in the court's treatment of the new money component of the Plan. Under the Plan, Plan Creditors were given a choice: those who participated in the provision of new money would receive "First-Out" secured notes, while those who did not would receive "Second-Out" secured notes on less favourable terms. Participation was, in formal terms, open to all Plan Creditors on the same basis.

In earlier non-cross-class cram down cases, that fact alone might have been sufficient to satisfy the court that there was no unfairness. However, following decisions such as Re Petrofac Ltd, courts have become increasingly alert to the risk that new money structures may operate, in substance, to confer disproportionate value on particular constituencies. Fossil confirms that this concern is not confined to cross-class cram down cases.

Although participation in the new money was formally open to all Plan Creditors, Mr Justice Richards did not treat this as determinative. Instead, he examined in detail whether the new money could operate to confer disproportionate value on a particular constituency, applying a level of scrutiny more commonly associated with cross-class cram down cases. The court (closely following Re Petrofac Ltd) examined whether the pricing of the new money was genuine, whether it had been properly market-tested, and whether it could be characterised as a "sweetheart deal".

The court emphasised that in this case, the fact that the choice was open to all Plan Creditors was not "mere window dressing". The judge noted that when the company's financial position appeared to improve, it "took the opportunity to consider afresh whether the pricing it was being offered remained attractive even in the light of what looked like better market conditions". On that basis, he concluded that these were "not the actions of a company that is seeking to do a 'sweetheart deal' which operates to the benefit of the constituency of investors providing New Money".

This reasoning reinforces two points:

• First, and coming as no surprise, the court will look at substance over form when assessing new money, its terms and who can participate, regardless of whether cross-class cram down is in play.
• Secondly, the evidential burden on plan proponents to demonstrate genuine market testing and fairness is not materially lower in a single-class plan than in a multi-class cram down.

Implications for single-class plans And schemes

Fossil, therefore, narrows the practical gap between sanction in single-class plans and sanction in cram down cases. While the statutory thresholds for schemes and plans differ, the court's willingness to interrogate the substance of the deal, rather than simply its level of support, reflects an underlying concern with fairness and integrity of whatever process is chosen.

That approach may influence how practitioners think about both restructuring plans and schemes. For restructuring plans, the message is clear: the absence of a dissenting class does not guarantee a light-touch sanction hearing. Plan proponents should expect to justify the commercial logic of their proposals, especially where they involve value allocation decisions that could be seen as contentious.

A UK process for US debt: forum choice and legitimacy

A further notable aspect of Fossil is its use of an English restructuring plan to restructure debt originally issued by a US company and governed by New York law, at a time when US courts have shown increasing sensitivity to perceived overreach in the use of Chapter 11. The Plan Company was newly incorporated in England and Wales, and its connection to the UK was, in economic terms, deliberately limited. The court addressed this head on. It accepted that the structure was, in a sense, artificial and created solely to access the desired restructuring tool, but rejected any suggestion that this rendered the Plan illegitimate. The question was not whether Fossil had engaged in forum shopping, but whether the chosen forum undermined creditor protections or circumvented core policy constraints.

A critical step was the consensual change in governing law of the notes to English law, which brought the debt squarely within the jurisdiction of the English court and engaged the Rule in Gibbs, meaning that after such switch to English law in the eyes of English jurisprudence, at least only English law could be used to amend the terms of the notes. The court also placed significant weight on expert evidence that the Plan would be recognised and enforced in the US through Chapter 15 proceedings, such that there would be a "reasonable prospect" of recognition. Notably, Mr Justice Richards observed that it was important the Plan did not violate public policy considerations underpinning US bankruptcy law. While such an inquiry is not a routine feature of English restructuring cases, it reflects a heightened sensitivity to the cross-border consequences of the court's decision and the importance of international comity in an environment of increasing jurisdictional competition.

Recognition and the international "two-step"

The successful recognition of the Plan in the US shortly after sanction underscores the growing viability of implementing a restructuring through a foreign court-supervised process and then seeking recognition and enforcement in the US under Chapter 15. Fossil represents the most recent high-profile example of a US-listed public company deploying this strategy, often described as the international "two-step".

In practical terms, the two-step allows companies to combine targeted use of the best suited restructuring process for the situation at hand, including the use of foreign restructuring regimes with the enforcement power of US recognition proceedings. At the same time, Fossil illustrates that the success of this approach depends on careful structuring, credible jurisdictional anchors and demonstrable fairness to affected creditors. As Fossil also demonstrates, the English court is careful not to overreach its jurisdiction and will carefully examine the facts and likely recognition. Fossil is likely therefore to serve as an important reference point for assessing when such strategies amount to "good" rather than "abusive or bad" forum shopping.

Conclusion

The Fossil judgment is significant not because it radically reshapes the landscape, but because it illustrates how the English restructuring plan is being applied in practice as a flexible, internationally oriented restructuring tool. The case confirms that a single-class restructuring plan is permissible and, in some circumstances, advantageous. At the same time, it signals that the court's scrutiny at sanction may extend beyond a narrow rationality review, even in the absence of cross-class cram down.

Perhaps most importantly, Fossil reinforces the idea that companies will increasingly look to the process that best suits their capital structure and stakeholder profile, wherever it may be found. In that environment, the English restructuring plan has positioned itself as a powerful and adaptable option — but one that comes with an expectation of rigorous judicial oversight.

^[1] Harrington v Purdue Pharma L.P., 603 U.S. 204, 227 (2024).