Waldorf Production UK plc, Re [2026] EWHC 1316 (Ch)

[2026] EWHC 1316 (Ch)

Case No CR-2025-008149

IN THE HIGH COURT OF JUSTICE

BUSINESS & PROPERTY COURTS OF ENGLAND & WALES

CHANCERY DIVISION

INSOLVENCY AND COMPANIES LIST (ChD)

Venue The Rolls Building, 7 Rolls Buildings, Fetter Lane

London, EC4A 1NL

Date Friday, 22 nd May 2026

Before

MR JUSTICE MICHAEL GREEN

Between

IN THE MATTER OF WALDORF PRODUCTION UK Plc

IN THE MATTER OF THE COMPANIES ACT 2006

DANIEL BAYFIELD KC and CHARLOTTE COOKE (instructed by White & Case LLP) appeared for Plan Company.

MATTHEW ABRAHAM (instructed by Milbank LLP) appeared for Bond Trustee and Steer Co.

MARK PHILLIPS KC and SAMUEL PARSONS (instructed by HMRC Legal Group) appeared for HMRC.

APPROVED JUDGMENT

Transcription of the Stenograph Notes of Marten Walsh Cherer Ltd.,

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[1]This is an application for permission to appeal brought by HMRC against the order that I made on 5th May 2026 consequent on my handed down written judgment of the same date. That judgment is reported at

[2026] EWHC 1014 (Ch)

. I rejected all of HMRC's objections to the sanctioning of the Part 26A plan put forward by the Plan Company, Waldorf Production UK plc. I will assume that anyone listening to or reading the transcript of this judgment has read my substantive judgment and is familiar with the issues and my findings. I will adopt the same abbreviations and definitions.

[2]The parties are represented before me today by the same leading and junior counsel as at the trial and I am grateful to them for their helpful submissions.

[3]I can therefore go straight to the grounds of appeal. HMRC put forward five potential grounds of appeal, which I will come on to deal with in detail, but Mr. Phillips KC, in his oral submissions, really put forward a somewhat, with all due respect, freeform over-arching point that this is a developing area of law and recent authority suggests that the law is leaning in favour of considering, in certain contexts, a more flexible approach to fairness, and in this case that means taking more seriously the proposal that he put forward on behalf of HMRC at the trial, namely the Contingent Payment Proposal.

[4]As I will come on to explain, I do not think it can seriously be suggested that I erred in law or failed to take any relevant matter into account, but Mr. Phillips' point, which was not so thoroughly developed at trial, was to the effect that I did not recognise enough that at least some of the tax losses would be used by the Plan Company and that it does not matter if HMRC is actually better off under the Plan than under the Relevant Alternative because fairness demands that HMRC gets some benefit from the availability and probable use of those tax losses. He complains -- and this forms part of ground 2 -- that I wrongly conflated the no worse off test with the exercise of discretion in relation to fairness. I think it is actually he that wrongly conflates the two. I was clear that I was considering the tax losses and their implication in the context of discretion.

[5]But as to the overarching point, and insofar as this is said to be a developing area of law and should go to the Court of Appeal, I assume under the “compelling other reason” ground under CPR 52.6, I do not accept that. In the end, all that Mr. Phillips was really saying was that I gave insufficient weight to the tax losses point and wrongly conflated no worse off with discretion. However, he cannot say that I applied no weight at all to the tax losses point and the respective weighing of relevant factors is not something that I think the Court of Appeal will be interested in.

[6]He also referred to the fact that RP1 was granted a leapfrog certificate to the Supreme Court and that the Supreme Court accepted it, showing that this is truly considered, by other judges at least, to be a matter of public importance. Again, I do not accept that that is relevant to this case. Merely because RP1 raised a point of public importance and that the trilogy of Court of Appeal cases, namely, Adler, Thames and Petrofac, had all found that the law on out of the money creditors had been set in the wrong direction and therefore could only be revisited by the Supreme Court does not mean that the Plan that I was considering similarly raised issues of public importance.

[7]There was no similar issue before me and the fact that in my case I sanctioned the Plan whereas Hildyard J did not sanction RP1 on different grounds does not suggest that the law has in some way gone wrong. The differences between RP1 and the Plan are amply demonstrated by the fact that HMRC took a very different approach to both Plans, seemingly being prepared to accept 15% of its EPL claim in RP1 (although it was not ultimately offered that) whereas it took full-scale objection to this Plan and any form of cram down.

[8]It is also relevant to point out that the jurisdictional points that were run by HMRC before me, namely, as to whether the cram down power can be used against HMRC and whether the tax losses could be part of the no worse off test, do not form part of HMRC's proposed appeal. In other words, HMRC has accepted my findings on those jurisdictional issues. Those points of law might have been ones that could be considered of public importance, but instead HMRC focuses on the exercise of my discretion, which is, of course, a far trickier thing to argue against on appeal.

[9]It is also of significance, it seems to me, as Mr. Phillips made clear in his oral submissions, that HMRC does not now challenge my factual findings as to the probable utilisation of tax losses or the fact that HMRC or the Exchequer are actually better off under the Plan than in the Relevant Alternative. In my view, that is highly significant and has led to the pivot in HMRC's position which now seems to be that the mere fact of there being tax losses that might be used would justify the Contingent Payment Proposal which, as Mr. Phillips described to me, would only come into effect if any such tax losses are to be used. However, that overlooks that I have to consider the overall fairness of the Plan by reference to all the Plan Company’s creditors, albeit specifically taking into account the particular position of HMRC with its continuing relationship with the Plan Company and the potential use of its tax losses.

[10]The Plan Company's main response to the application for permission to appeal was that this was an exercise of discretion and unless I had applied the law incorrectly or taken into account irrelevant factors or failed to take account of relevant factors, the Court of Appeal will not interfere. I was referred to Thames at [98] and Adler at [104]. There are other authorities as well to the same effect and it does seem to me to be a significant reason why permission to appeal should not be granted in this case.

[11]I now turn to the specific grounds of appeal and I will take them in turn.

[12]The first ground asserts that, in the judgment, I wrongly did not treat HMRC as any different to an ordinary unsecured creditor. Mr. Phillips said that while I paid lip service to the authorities and referred to the fact that HMRC's decision and position should be accorded great weight, in the end, I failed to do so and disregarded the fact that it is an involuntary creditor that is not able to negotiate for security for its debt. He referred to what Isaid in paragraph 229 of the judgment, that there was no logical reason why HMRC should be treated differently to the M&A Creditor (the only other unsecured creditor).

[13]As Mr. Bayfield pointed out in his written submissions, I said that at the end of the section of my judgment on fairness and it was the conclusion I came to after I had conducted the necessary evaluative exercise of balancing the relevant factors going to fairness and discretion in the case. Thus, I dealt with the issue of tax losses, which was the main basis for HMRC's objection to the Plan, but also with the points raised by Mr. Phillips as to whether this was a rescue or terminal Plan, and the fact that there was an ongoing relationship with the Plan Company. I referred to fact that HMRC considers itself to be in a separate category of creditor, but I took into account that Parliament had not given it any preferential status and it is potentially, therefore, subject to cram down.

[14]Taking all that into account and in the circumstances of this case, I considered that, at the end of the day, HMRC had not shown any good reason why it should be treated differently to the other unsecured creditor with whom it was in alliance on RP1, when they put forward joint offers, but from whom in relation to the Plan HMRC now wishes to distinguish itself. I should add that RP1 was not a terminal case because it was intended as a bridge towards a potential sale. Thus, HMRC would have had an ongoing relationship with the Plan Company and potentially faced the use of the tax losses against it.

[15]In any event, I do not think that there is any real prospect of successfully appealing against my discretion on the grounds set out in ground 1.

[16]Ground 2 is that I wrongly allowed the no worse off test to be effectively determinative of fairness. Included in ground 2, by a bit of a side-wind, appeared to be a challenge to my factual findings that HMRC was in fact no worse off under the Plan than the Relevant Alternative. But Mr. Phillips confirmed orally that that does not really form part of HMRC’s proposed appeal.

[17]In relation to the no worse off test, as I have said, I ruled on the statutory no worse off test under Condition A in section 901G(3) of the Companies Act 2006, finding that the tax losses could not be brought into that calculation. There is no appeal from that finding. So, the only relevance of the tax losses is in relation to discretion and it certainly seemed to me to be a very significant part of HMRC's case that because of the use of those tax losses by Harbour, should the deal go through and the Plan be sanctioned, the Exchequer would be very substantially worse off under the Plan than in the Relevant Alternative. I made clear that I found that a compelling argument and that the tax losses should be a factor when one comes to discretion.

[18]Obviously, in the end, HMRC was unable to satisfy me that even taking into account the tax losses, it was worse off on the facts. Given the way that the case had been run by HMRC, that was a significant factor to take into account on discretion. I do not see how HMRC can argue otherwise, and it is curious that it submits that I was basically using the statutory no worse off test as determinative of the outcome. That would be contrary to what is clear on the authorities, particularly Adler, that satisfaction of Condition A does not even give the Plan Company a "fair wind" on fairness.

[19]But I was precisely not doing that. I was looking at the wider landscape of discretion and taking into account the effect of the tax losses being used against HMRC, something which was the main focus of HMRC's evidence (although without an independent tax expert), and this went against what the Plan Company had said I should do. Having allowed it into the consideration, I found that HMRC's case was undermined by the fact that it failed to counter the evidence that the use of the tax losses would not be prejudicial to it by comparison with the Relevant Alternative. It is also, as Mr. Bayfield submitted today, necessary to consider the disbenefits to HMRC of the Plan Company going into liquidation, something which I also took into account.

[20]As to the facts, I would have suggested that there is no real prospect of successfully overturning any of the factual findings in such regard and Mr. Phillips does not now seek to do so. The main attack was on the findings as to what HMRC conceded in its evidence, principally that of Mr. McFarlane, who was cross-examined at the trial by Mr. Abraham. I note that what Mr. Phillips told me was that Mr. McFarlane was concerned about my findings as to what he had apparently conceded. It is also of note, in my view, that Mr. Phillips made no similar submissions on the facts at trial and merely swept the submissions of Mr. Abraham and the evidence he referred to aside as being of no relevance or of little importance. That still seems to be the position that he is adopting, that the question of whether HMRC and/or the Exchequer are worse off is entirely irrelevant on the question of discretion. As I have said, I think he is thereby wrongly conflating the no worse off test with discretion.

[21]In any event, the points in relation to the evidence do not stand up. The first point concerned my reference to Mr. McFarlane admitting to there being “challenges” to Harbour being able to use 100% of the tax losses. However, Mr. Abraham, in his written submissions, referred me to the transcript of Mr. McFarlane's evidence and I am quite satisfied, having looked back at that, that my finding that he considered there would be challenges to utilising 100% of the tax losses is supported by his evidence. Indeed, that is not now challenged by HMRC.

[22]Furthermore, Mr. Leith was unchallenged as to his three main reasons for saying the tax losses could not be fully used. Those three reasons were:(i) HMRC may challenge their use under various anti-avoidance provisions;

(ii) that there would be practical complexities in utilising the losses; and

(iii) that it was impossible to know if Harbour would be profitable enough to utilise the losses. Mr. McFarlane accepted all these points, hence the conclusion that less than 100% utilisation was more than likely.

[23]The second point concerned decommissioning relief and my finding that Mr. McFarlane had accepted the unchallenged evidence of Mr. Leith and agreed that it was likely that there could not be full utilisation of the decommissioning relief. Whatever the ins and outs as to how decommissioning relief could be used, Mr. McFarlane again clearly accepted at the end of his cross-examination that it was unlikely that there could be 100% utilisation of both the valuation date losses and the decommissioning relief. That really puts paid to HMRC's case in this respect.

[24]It also disposes of the third point in HMRC's submissions, which was that Mr. McFarlane did not say what I have just set out he did say. He clearly did say that and I was entitled to rely on it in making the findings that I did.

[25]HMRC also made some points about Mr. Leith's evidence and sought to reframe the question into whether Harbour could generate sufficient taxable profits to use the tax losses. That is only one factor in the assessment I made as to whether it would be likely that Harbour could utilise 100% of both sets of losses. Unless it did so, the Exchequer would not be worse off as demonstrated by the agreed sensitivity analysis in the joint report of the experts.

[26]Finally on this, in his written submissions, although not taken forward orally this morning, there was the somewhat extraordinary submission that HMRC had not conceded that the Relevant Alternative was a scenario where the Group went into formal insolvency, but that WPRL and WOL (which had the most valuable tax losses of over $800 million) would be sold as going concerns. Many times I remember saying that the Relevant Alternative was not disputed at the trial and at least once I put that to Mr. Phillips directly. At no time was that demurred from and there were no submissions, whether in writing or orally, as to a different Relevant Alternative. I really think that ground cannot and seemingly is not open to HMRC.

[27]In conclusion on ground 2, there is nothing in the factual points raised by HMRC and I consider there is no real prospect of successfully challenging my judgment on the basis set out in ground 2.

[28]Ground 3 concentrates on an alleged failure to consider the ongoing relationship between HMRC and the Plan Company, and placing too much weight on the commercial deal agreed between the other creditors and the Plan Company and Harbour. HMRC suggests that I should have given more weight to its Contingent Payment Proposal and this really goes back to Mr. Phillips' over-arching point. As I have already said, this seems to me a pure attack on the balancing exercise that was performed with HMRC suggesting not that I took the wrong things into account, but that I placed insufficient weight on some factors and too much weight on others.

[29]I do not think that such an argument will get very far in the Court of Appeal. The fact of HMRC's continuing relationship with the Plan Company is a feature of most plans and CVAs which are not terminal plans. Parliament has not singled out HMRC as having a special position in relation to such plans or CVAs. It is a factor to bear in mind, as I did, including in considering the tax losses, something that only arises because of that ongoing relationship.

[30]I dealt also with the Contingent Payment Proposal, which, while not very clearly spelled out at trial, amounted to a renegotiation, it seemed to me, with Harbour to persuade it to pay more money which I concluded was very unlikely to happen. That deal, being the only deal and the best one available, it would be highly prejudicial to everyone else to lose it. In short, it would be a very risky move and I did not think that fairness to all the creditors would be achieved by taking that dangerous course. In fact, HMRC had said that if I did not sanction the Plan it would apply to wind up the Plan Company, which would have put paid to any Contingent Payment Proposal that it had.

[31]Ground 4 concerns the alleged failure to take into account or give sufficient weight to the fact that the Plan Company's financial difficulties were caused by mismanagement in the payment of the October 2022 Dividend, the July 2024 refinancing, continuing to trade while not paying the EPL Liabilities and continuing to pay interest to the secured bondholders. It also criticises my comment that the Plan Company's sins of the past should not penalise the Plan creditors who were not responsible for that conduct.

[32]Mr. Phillips submitted that this ignores the fact that the secured creditors were part of the July 2024 refinancing and so should be taken to have accepted the risk of not being paid as a result.

[33]Again, these were all matters that were considered as part of the exercise of discretion and I do not think that the Court of Appeal will want to revisit whether I applied sufficient weight to one factor and insufficient weight to another. That is a matter par excellence for the trial judge.

[34]I understand that HMRC is annoyed with the judgment because I largely rejected its objections and submissions, but going to the Court of Appeal is not so that it can reargue all its points again, in particular those going to the exercise of discretion. There is, in my view, no real possibility of the Court of Appeal finding that no reasonable judge could have come to the conclusion that I did.

[35]Finally, Mr. Phillips went so far as to suggest in ground 5 that the judgment provides a charter for M&A deals to be structured in a similar way so as to get rid of all unwanted tax liabilities at the behest of a third party purchaser which does a deal essentially with the secured creditors to stitch HMRC up. While such a point may make the appeal look more attractive to the Court of Appeal, I am afraid to say that I think it is highly exaggerated. I do not think this will be the judgment's "inevitable effect", far from it. I emphasised in [236] of the judgment that the burden on Plan Companies remains high to satisfy the court on fairness, having got past the jurisdictional hurdles. I know my fellow judges dealing with Part 26A plans in the future will continue to scrutinise them carefully.

[36]Therefore, I think this ground really is hopeless.

[37]In all the circumstances, I refuse permission to appeal on all grounds. -------------------------