The UK High Court has ruled that the obligations of third-party guarantors are not affected by a part 26A restructuring plan being sanctioned in respect of the underlying obligations. This approach mirrors the way guarantees are dealt with in a part 26 scheme of arrangement.

The case of Oceanfill Ltd. v Nuffield Health Wellbeing Ltd & Cannons Group Limited examined whether a restructuring plan under part 26A of the Companies Act 2006 (the “Act”) had the effect of releasing liability arising under a third-party guarantee.

The landlord was successful in its arguments that the original tenant and guarantor remained liable for guaranteed rent, despite the sanction of a part 26A restructuring plan which reduced the liability of their assignee, Virgin Active.

The court considered the possibility that in allowing claims against guarantors to proceed, so-called “ricochet” claims could surface against the plan company, which might have the ability to undermine the purpose of the restructuring plan. This did not alter the court’s decision to allow the landlord’s claim, however, it does raise the issue of how ‘ricochet’ claims might be dealt with in future plans – see our further comments on this below.