The Conceptual Foundation of Cross-Class Cramdown

Abstract The Corporate Insolvency and Governance Act 2020 introduced a statutory ‘cross-class cramdown’ provision in UK corporate restructuring law, enabling the court to impose a restructuring plan on a class of creditor or shareholder that has voted against it. This has dramatic consequences for the law and practice of reorganising financially distressed companies. The statutory provision is, however, extremely thin, offering no solid basis for the power and posing real challenges for judges who are trying to work out the contours of its operation. This article seeks to fill the gap. It suggests three alternative ways to conceptualise the power: the enforcement approach; the adjusted enforcement approach; and the bargaining approach. The core claim is that the UK power is built on the bargaining approach and that this has significant implications for the way in which the power should be developed in the future.