Restructuring and insolvency: Key developments to watch in 2025

As we begin 2025, significant developments in restructuring and insolvency law are set to shape the landscape for practitioners in England and Wales. From high-profile court cases to pending legislative reforms, here are the key issues to keep on your radar.

Landmark cases

Invest Bank PSC v El-Husseini

The Supreme Court recently handed down judgment in El-Husseiny and another v Invest Bank PSC ([2025] UKSC 4), confirming that section 423 of the Insolvency Act 1986 applies to transactions where a debtor arranges for a company they own to transfer assets at an undervalue. The court found that the scope of section 423 is not limited to situations where the debtor personally owns the asset in question. This ruling provides much-needed clarity on the breadth of the legislation and strengthens creditor protections against asset dissipation.

Thames Water

The High Court has approved Thames Water’s £3 billion debt restructuring plan, providing the UK’s largest water supplier with a crucial financial lifeline. The plan, backed by senior creditors, includes an immediate £1.5 billion infusion, with another £1.5 billion available if needed, extending funding through May 2026. Despite opposition from lower-ranked creditors over the 9.75% interest rate, the court ruled the proposal fair, emphasising that without it, Thames Water would likely face special administration.

This decision comes as Thames Water grapples with its £19 billion debt and regulatory scrutiny over environmental concerns. The company must now raise over £3 billion in new equity while restructuring its financial obligations. It is also appealing a regulatory decision to increase customer bills by 35% over the next five years, arguing for a 53% rise to fund necessary infrastructure improvements. The approval of this restructuring plan is a pivotal step in stabilising the company and ensuring continued service to its 16 million customers.

Legislative and regulatory updates

Despite previous announcements, there has been little progress on the anticipated reforms to the Insolvency (England and Wales) Rules 2016 (IR 2016), including proposed amendments to streamline procedures. The government’s commitment to implementing the UNCITRAL Model Laws on Enterprise Group Insolvency and Recognition of Insolvency-Related Judgments remains uncertain, with no clear timeframe for legislation.

The future of personal insolvency and digital assets

Reform of the personal insolvency framework is expected, with an initial focus on changes achievable through secondary legislation. Research into the high failure rate of Individual Voluntary Arrangements (IVAs) has highlighted the need for stricter adherence to industry standards. In parallel, the legal treatment of digital assets in insolvency continues to evolve. The UK Jurisdiction Taskforce’s 2024 statement on digital assets emphasised the need for insolvency practitioners to engage with blockchain technology, and further case law developments are anticipated in 2025.

Looking ahead

While 2025 may not bring sweeping changes to insolvency law, key court decisions and incremental regulatory updates will continue to shape the practice. Staying informed on these developments is crucial for practitioners navigating an evolving insolvency landscape.