Court delivers Poundland restructuring plan: key insights from the judgment

On 24 October 2025, Sir Alastair Norris handed down judgment in relation to Poundland’s Part 26A Restructuring Plan (RP), which was successfully sanctioned by the High Court on 26 August 2025. This is the largest leasehold restructuring RP implemented to date.

Restructuring & Insolvency partners Elaine Nolan and Gabe Harley, advised Poundland’s new investors, Gordon Brothers, alongside AlixPartners, as financial advisers.

Recent developments in Restructuring Plans

Since 2024, the High Court has sanctioned at least twelve RPs, all of which relied on the ability to utilise the cross class cram down (CCCD) power. Six of the twelve have been in the retail and consumer sector: C-Retail/Superdry (June 2024); Cineworld (Sept 2024); Thames Water (February 2025); Outside Clinic (March 2025); River Island (August 2025) and now Poundland. The retail/consumer goods group Fossil, is also now pursuing the process.

Three recent Court of Appeal decisions in Adler, Thames Water and Petrofac, provide powerful guidance as to the exercise of the Court’s discretion to exercise CCCD at sanction, which continues to develop on a case-by-case basis. We also await the outcome of the Waldorf appeal before the Supreme Court (expected to be heard in Jan/Feb 2026).

The terms of Poundland’s RP

Following an extensive sale process led by Teneo, Gordon Brothers acquired Poundland in June 2025 for nominal consideration, subject to the implementation of the RP to deliver a financial and operational restructuring. The judgment states there was a “thorough probing of the open market”.

The plan was approved to prevent Poundland from entering administration, given its liquidity requirements and the necessity to implement the restructuring.

The key elements of the RP include:

Financial measures:

• New funding: £35 million of new funding made available (to an available limit of £95 million) and maturities extended by three years to 1 September 2028.
• Release of existing debt: approximately £244 million of existing unsecured loans owed to the previous owners of the business, Pepco, were released in exchange for 30% equity. The equity was independently valued by FTI.
• Overdraft facility: Pepco provided a new £30 million overdraft facility.
• Rent reduction: Rents were amended, compromised or reduced in relation to 476 current leases.
• Business Rates reduced and arrears compromised for the current Business Rates year and other unsecured creditors compromised.

Store and Warehouse changes:

• Store closures: Poundland will close 68 of its 800 UK stores, reducing its total to between 650 and 700 locations.
• Warehouse closures: The frozen and digital distribution centre in Darton will close, along with the national distribution centre in Bilston.

Operational adjustments:

• Product focus: The company will withdraw from selling frozen food and reduce its chilled food range to focus on its core value proposition. It will also reintroduce popular product categories and expand its womenswear offerings.
• Digital strategy: The transactional website, Poundland.co.uk, will be converted into a brand-focused site.

Legal conditions under cross class cram down

CCCD allows the Court to sanction a plan, even if not all classes of creditors approve it. Given the importance and use of CCCDs, three questions must be considered by the Court:

• Condition A: If the restructuring plan is sanctioned, would any members of the dissenting class be any worse off than they would be in the event of the relevant alternative? This is often described as the “no worse off”
• Condition B: Has the plan been approved by 75% of those voting in any class that would receive a payment, or have a genuine economic interest in the company, in the event of the relevant alternative?
• General Discretion: In all the circumstances, should the Court exercise its discretion to sanction the restructuring plan?

In Poundland’s RP, Condition A was satisfied as recoveries for all dissenting creditors were higher under the Plan than in the Relevant Alternative. Importantly, a £500 “floor” was set, to ensure there was an “arrangement” with all Plan Creditors, following the guidance in Adler.

The ‘genuine economic interest test’ in Condition B was also satisfied because in the Relevant Alternative, each of the assenting classes would receive a payment and/or have a genuine economic interest in the Plan Company.

The Court’s general discretion

Based upon the guidance in Adler, Thames Water and Petrofac, Sir Alastair Norris outlines eleven guiding principles in the judgment (which were repeated from his judgment in River Island), when deciding whether to exercise its CCCD power. Taken together, these principles can be summarised as follows:

• Does the plan provide for differences in treatment of the creditor classes (including those creditors that are pari-passu in the Relevant Alternative) and, if so, can those differences be justified?
• Are the benefits preserved or generated by the plan fairly allocated as between different groups of creditors?

No creditor appeared in Court to oppose the Plan and the judge concluded that there was no basis for holding that either the priority accorded to funds injected into Poundland to preserve the company or the allocation of equity (outlined below) was unfair vis-à-vis the landlords and other creditors.

Allocation of Benefits

This is only the second plan in which the allocation of benefits has been supported by an independent expert report.

Poundland’s independent report, prepared by FTI, was the most detailed report prepared in any case to date.

The judge commented that whilst the nature of the report cannot contain all information that may be required to evaluate the proposed restructuring plan, given the various assumptions upon hypothesis, the judge was satisfied that the findings did not demonstrate any fundamental “unfairness” to refuse to sanction the plan.

Valuation of equity retained by Pepco

FTI also prepared a report on the equity value, given that the Seller of the business, Pepco, received 30% equity in consideration for the release of its approximately £244 million unsecured claims and provision of a £30 million new overdraft facility. FTI valued the post-restructuring equity value (£0-£4 million). The judge acknowledged the benefits of the plan that were generated by Pepco which subordinated its financial interests, in its desire to preserve the business.

Excluded creditors

It is well established that the provision of critical goods or services is a sufficient commercial justification to exclude the relevant creditors from a plan or scheme. In Poundland, certain leases, critical trade creditors, employees, HMRC and liabilities arising under a supply chain finance agreement were excluded from the Plan, which was accepted by the Court.

Upside Sharing Entitlement

In addition, the plan consideration provided landlords with an entitlement to share in any upside that may arise post-restructuring, based upon an excess cumulative EBITDA entitlement in line with the Plan Company’s Business Plan.

Changes to Schemes and Plans

The UK Judiciary recently issued a new Practice Statement on Schemes of Arrangement and Part 26A Restructuring Plans. These provisions will apply to all cases listed on or after 1 January 2026 and include:

• filing a Claim form when booking court dates;
• filing a listing note with the Claim form in advance of any court hearing to assist the Court in managing its resources;
• filing evidence at least 14 days ahead of the convening hearing;
• demonstrating creditor engagement and reasons for any different level of engagement or information with creditor groups; and
• making it easier for creditors to digest increasingly complex and detailed proposals ahead of voting.

Keystone Law has 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.