Poundstretcher Limited: High Court Sanctions Retail Restructuring Plan and Cross-Class Cram Down

Today, Mr Justice Hildyard handed down judgment in relation to Poundstretcher’s Part 26A Restructuring Plan, exercising the Court’s cross-class cram down jurisdiction against six dissenting creditor classes. The judgment is a significant addition to the growing body of authority in the retail and consumer sector, including C-Retail/Superdry (June 2024); Cineworld (Sept 2024); Thames Water (February 2025); Outside Clinic (March 2025); River Island (August 2025); Poundland (2025); (Las Iguanas 2026), and the TG Jones Restructuring Plan launched on 6th May 2026.

Restructuring & Insolvency partners Elaine Nolan and Gabe Harley advised Poundstretcher.

THE RESTRUCTURING PROPOSED BY THE PLAN

The Plan has five basic features:

1. amending the first ranking ABL Facility and second ranking Shareholder Loan Agreement (advanced by shareholder funds managed by affiliates of Fortress Investment Group), including extending the maturity date of the Shareholder Loan Agreement from 2026 to 2029;
2. enabling Poundstretcher to access a further £4.5 million of funding from the Shareholder Loan Agreement to implement the Turnaround Business Plan;
3. compromising and releasing in full Poundstretcher’s liabilities to the Intercompany Lender;
4. restructuring Poundstretcher’s portfolio of 298 leases; and
5. compromising and releasing the Plan Company’s business rates liabilities and other unsecured liabilities.

PLAN MEETINGS AND VOTING OUTCOME

The Plan was approved at meetings held on 26 May 2026. Eight of the fourteen classes voted in favour, whilst six classes voted against. Notwithstanding the existence of dissenting classes, the Court noted the substantial overall support achieved by the Plan, which was supported by 93% by value of voting Plan Creditors.

ALLOCATION OF BENEFITS AND SHAREHOLDER RETENTION

The Court undertook a detailed analysis of FRP’s Allocation of Benefits Report, applying the principles discussed by the Court of Appeal in Petrofac.

The Court accepted FRP’s evidence in the Relevant Alternative Report and Allocation of Benefits Report and concluded that the value being contributed by Fortress affiliates substantially exceeded the estimated day-one equity value being retained. As a result, equity retention did not represent an unfair extraction of value from dissenting creditors.

THE GUARANTEED LANDLORD CHALLENGE

The most substantial challenge arose from two guaranteed landlords, whose leases benefited from guarantees granted by Poundstretcher’s direct holding company.

The Court concluded that the guarantees were found to have no meaningful economic value in the Relevant Alternative. Since the Plan compensated guaranteed landlords by reference to 175% of their estimated administration recoveries, the Court concluded that the guaranteed landlords were no worse off under the Plan.

SIGNIFICANCE

The judgment reinforces the Court’s willingness to sanction retail restructuring plans involving substantial landlord compromises, where administration is the realistic alternative and dissenting creditors are demonstrably better off under the Plan. It also provides important guidance on landlord guarantee compromises, details of the Plan Company’s Turnaround Business Plan and the allocation of restructuring benefits following Petrofac.

NEW PRACTICE STATEMENT

This Plan followed the guidance under the new Practice Statement on Schemes of Arrangement and Part 26A Restructuring Plans, which apply to all cases listed after 1 January 2026, including filing a Listing Note with the Claim Form and filing key evidence 14 days ahead of the convening hearing.

The team at Keystone have market leading experience in leasehold restructurings and significant experience in the retail and consumer sector.  Please contact Elaine Nolan and Gabe Harley, if you would like to discuss.