For those in the mid-market who have watched developments in restructuring plans (RP) move from a potential rescue tool, to something prohibitively expensive, the OutsideClinic RP might be one to watch. Not least because the RP seeks to cram down HMRC.

Following RPs proposed by Naysmyth and the Great Annual Savings Company (which were unsuccessful in cramming down HMRC) the appetite to use an RP in the mid-market does seem to have quietened down, despite HMRC subsequently issuing guidance for insolvency practitioners intended to help companies that wish to restructure using an RP.

There is little reported about the OutsideClinic’s RP at the moment, save that as part of the plan it seeks to treat unsecured creditors and HMRC as secondary preferential creditor, in the same way, by paying both classes of creditor 5p in the £. 

HMRC’s objections to previous plans have largely stemmed from the fact that the RPs have not recognised its preferential status in how the restructuring surplus (created by the RP) has been shared.

The relevant alternative to OutsideClinic’s RP is stated to be administration, and, somewhat unusually, the estimate suggests that HMRC would receive nothing in an administration. That might differentiate this RP from other “typical” mid-market plans. However, if press reports are correct, HMRC has indicated that it intends to challenge the plan including how it is treated under the plan given its preferential status.

If HMRC do challenge the RP, the development of HMRC’s argument about its treatment as preferential creditor under the plan will be one to watch, because this will likely inform how mid-market RPs could develop in the future.

That said, if HMRC’s position is that it will challenge all RPs to reflect its position as an involuntary creditor, the costs of having to deal with that challenge on every RP are likely to price out RPs for the majority of the mid-market. Perhaps the real one to watch, will be an RP that receives HMRC support even where it includes some write down of amounts owed to HMRC!