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Year-End Insolvency Review 2025 – What Mattered Last Year?

2025 was the year the courts set firmer ground rules. In addition to new laws, we have seen judges placing more emphasis on Schemes and Restructuring Plans, pre-packs and phoenix-type deals, and also the enforceability of foreign judgments in UK insolvency processes.

Below is a short, practical summary of what changed and why it matters.

Schemes and Restructuring Plans

A new Practice Statement for Schemes of Arrangement (Part 26) and Restructuring Plans (Part 26A) applies to hearings from 1 January 2026. The effect is substantial as much more needs to be done upfront as the courts expect a more disciplined, court-controlled process:

1. You must issue a claim form before getting a hearing date;
2. A detailed listing note is required at the outset, covering likely contested issues, time estimates, class questions and anything affecting timetable;
3. Evidence – including valuation and “relevant alternative” materials – must be substantially ready before the convening hearing;
4. Arguments, issues and grounds need to be properly developed well in advance – scrutiny is now firmly front-loaded; and
5. Creditors who want to object must do so before the hearing, to limit ambush tactics.

The result is that schemes and restructuring plans now look and feel far more like managed litigation than flexible restructuring tools. Preparation standards are much higher, timetables tighter and poorly prepared proposals are unlikely to gain momentum.

Phoenixism, Pre-Packs and Enforcement Pressure

One of our busiest areas in 2025 has been the renewed attention on pre-pack deals and directors’ conduct, as the Challenge Recruitment Group collapse has become the case everyone cites when discussing why. In brief terms:

1. There has been renewed attention on corporate structures that recycle assets through pre-packs while leaving material unsecured creditor claims – especially HMRC – behind.
2. HMRC has intensified its attention on how and why phoenixism is costing the UK billions – around 22% of the £3.8bn tax losses in 2022-23.
3. This has drawn political and regulatory scrutiny and sharpened focus on the advice given to boards and office-holders.
4. HMRC, the Insolvency Service and Companies House have been explicitly directed to work more closely to clamp down on “contrived corporate insolvencies.”

As a result, director-conduct and disqualification enforcement has become more assertive. The emphasis is on substance over form. For boards, the point at which the creditor interests must take precedence is now difficult to ignore. For advisers, restructuring strategy needs to be developed with enforcement risk in mind.

Foreign Judgments: No Fast Track to Insolvency

Another important, if quieter, development in 2025 came from Servis-Terminal LLC v Drelle. The Court of Appeal confirmed that an unrecognised foreign judgment cannot support a statutory demand or bankruptcy petition in England and Wales, and the reasoning is likely to apply equally to winding-up petitions. In doing so, it reaffirmed the core principle that a foreign judgment has no legal effect until it is recognised, whether under a statutory regime or through common-law action.

A further practical consequence of this decision is the continued emphasis to seek recognition of foreign insolvency proceedings. Insolvency practitioners appointed overseas will generally need to take an additional step to obtain recognition in England and Wales before they can exercise powers, seek relief or engage UK insolvency processes.

For all stakeholders, the message is clear that recognition process is not an optional preliminary and that foreign insolvency/proceedings do not take effect automatically in this jurisdiction.

Looking Ahead at the Emerging Pressure Points

Looking ahead, and given our combined expertise, we also set out a few areas where pressure is building (even if not driven by formal insolvency legislation):

1. Property-related exposure.
   • Obligations under the Leasehold and Freehold Reform Act 2024 and the Building Safety Act 2022 continue to bite. Contribution orders, defect-remediation duties and landlord/tenant liabilities increasingly can reduce recoveries and can influence director-conduct analysis well before formal insolvency.
2. Digital Assets, Cyber Risk and Offshore Assets
   • These developments sit alongside a growing practical focus on digital assets, including cryptoassets, whose status as “property” is becoming increasingly clearer. For insolvency practitioners, however, legal classification is only the starting point. Volatility, asset pooling, evidential complexity and the practical irreversibility of certain blockchain transactions present real challenges in tracing, securing and realising value. As with cross-border enforcement, success in this area increasingly depends on early strategy, specialist input and close coordination between legal, technical and international advisers.

The above is a snapshot of some of the issues now arising and while deeper, specific advice can be provided, the direction of travel is clear in that insolvency practice now requires not only legal judgment but also technical capability and cross-disciplinary collaboration.

To discuss any of the points raised in this review, or for more assistance with your matters, please contact Robert Kay (Partner) and Ann Goh (Associate) or fill in the form below.

This article does not constitute legal advice.

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The EU’s New Online Contract Rules – What Online Retailers Need to Know

Directive (EU) 2023/2673 (the Directive) which was adopted as part of the EU’s wider consumer protection reforms, introduces a significant practical change to how online retailers must enable consumers to exercise their right of withdrawal from online contracts. Although the directive is primarily framed around distance financial services, it amends the Consumer Rights Directive (Directive 2011/83/EU) in a way that affects all online consumer contracts within scope of that regime.

The Existing Right of Withdrawal

Under the Consumer Rights Directive, consumers entering into online contracts or other distance or off-premises contracts generally benefit from a 14-day right to withdraw from the contract without giving a reason. While online retailers have long been required to inform consumers of this right and provide a model withdrawal form, the legislation has historically focused more on disclosure than on the user experience of withdrawal.

The New Obligation

The Directive shifts the emphasis onto the user experience by requiring that from 19 June 2026 online sellers provide a mandatory withdrawal function for consumers on their e-commerce sites. The underlying principle is that consumers must be able to withdraw from a contract as easily as they were able to enter into it.

In practical terms, this means that the online interface used to conclude the contract must also allow the consumer to submit a withdrawal notice electronically.

Who Is Affected?

These requirements will apply to:

• traders established in the EU that sell goods, services or digital content online to consumers; and
• traders established outside the EU where their online activities are directed at EU consumers.

As a result, many non-EU based retailers who target EU consumers will also need to assess whether their current online contracting journeys meet the new standard.

Key Features of the Withdrawal Function

The Directive sets out clear expectations for how the withdrawal function must operate. In particular, it must:

• be clearly labelled with wording such as “withdraw from contract here” (or equivalent unambiguous language);
• be easy to find, legible and continuously available during the withdrawal period;
• allow the consumer to identify the contract they wish to withdraw from (including partial withdrawal, where relevant);
• enable the consumer to submit a clear withdrawal statement online; and
• generate an acknowledgement of receipt on a durable medium (such as email), including the date and time of submission.

When a consumer has already identified themselves (for example, by logging into an account), the retailer should not require unnecessary re-identification as part of the withdrawal process.

What Businesses Should Be Doing Now

Although the new rules do not apply until June 2026, they are likely to require technical and design changes to online sales platforms, not just legal updates. Businesses should therefore start considering:

• whether existing account pages, order histories or customer dashboards could support a complaint withdrawal function;
• how withdrawal confirmations will be generated and stored;
• look at training customer support/CRM teams on the changes so they can ensure that consumer queries are dealt with compliantly;
• consider what changes will be required to CRM processes to manage the practical aspects of the changes; and
• whether pre-contact information and T&Cs accurately reflect the new withdrawal mechanics.

Failure to implement the withdrawal function correctly may expose businesses to enforcement risk and undermine their ability to rely on protections such as deductions for use or charges during the withdrawal period.

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Probate and Caveats

What Is a Caveat and When Should You Use One?

When someone dies, their estate is usually administered by applying for a grant of probate (if there is a will) or letters of administration (if there is no will). Once a grant is issued, it gives legal authority to the people named in the grant to deal with the deceased’s assets. This includes collecting in those assets and distributing them to the legal heirs of the estate.

A caveat is a formal notice lodged at the Probate Registry, which prevents a grant from being issued. It is used where there is a dispute or concern about the validity of a will, or a disagreement about who should administer the estate.

In simple terms, a caveat puts the probate process on hold while issues are investigated or resolved.

When Should a Caveat be Used?

Common reasons for entering a caveat include:

• Doubts about whether the will is valid, including for lack of capacity or undue influence.
• Discovery of a later will or wills.
• Disputes over who is entitled to apply for the grant, including concerns about the conduct or suitability of the proposed executor or administrator.

A caveat is not appropriate for disputes under the Inheritance (Provision for Family and Dependants) Act 1975 and lodging a caveat in those circumstances or simply because you disagree with a will or an executor/administrator without good reason is an abuse of process that could have cost consequences.

If in doubt, you should seek professional advice as to whether a caveat is the appropriate step.

What Does a Caveat Do?

Once entered, a caveat:

• stops the Probate Registry from issuing a grant;
• lasts for six months but can be renewed; and
• applies to all applications for a grant relating to that estate.

While a caveat is in place, no one, apart from the person who lodged the caveat, can obtain probate until the caveat is removed.

How Do You Enter a Caveat?

Caveats are relatively inexpensive and straightforward to enter.

You can lodge a caveat for £3:

• online via the government website, or
• by post using form PA8A.

You will need:

• the deceased’s full name;
• date of death;
• last known address; and
• your own details as the caveator.

You do not need to explain your reasons when entering the caveat.

What Happens After a Caveat Is Entered?

If no one challenges the caveat, it simply remains in place for six months and can be renewed indefinitely.

If someone wishes to proceed with probate, they will seek to remove the caveat by ‘warning’ it. In order to protect a caveat against a warning, the person who lodged it must ‘enter an appearance’ to protect it.

‘Warning’ a caveat and ‘entering an appearance’ are procedurally complex steps requiring affidavit evidence, which must be filed and issued by the relevant district probate office. Therefore, professional advice must be obtained promptly if your caveat is warned. If the strict deadlines are not adhered to, or there are errors in the warning or appearance, then the caveat in question could be removed.

If solicitors are instructed in a probate dispute, it is always recommended that they renew or take over the management of a caveat to ensure deadlines are not missed and all correspondence is sent directly to them. If a caveat is inadvertently removed, then potential probate claims can be significantly weakened as the executors or administrators can apply for probate and distribute the assets. To protect a probate claim without a caveat, expensive and risky injunctions may need to be obtained to secure estate assets.

Once an appearance has been entered, a caveat can only be removed by way of a Court order. Therefore, if a party has entered a caveat incorrectly, there could be significant cost consequences.

Conclusion

Caveats should not be used lightly. Inappropriate or tactical use can delay estate administration unnecessarily, increase legal and administration costs and expose the caveator to adverse cost consequences if proceedings follow.

Ultimately, a caveat is a protective tool, not a weapon. Therefore, although it is easy and cheap to enter a caveat, legal advice should be sought as soon as possible, because caveats can quickly become complex and costly. However, when used correctly, they are essential to pursuing a successful probate claim.

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