Breaking New Ground: How a Part 26A Restructuring Plan Saved an SME

When Part 26A restructuring plans were introduced in the UK, they were widely seen as a tool reserved for large corporates with deep pockets. For SMEs, the perception was simple: too complex, too costly, and too inaccessible. But the recent restructuring of DSTBTD Limited, a London-based talent-on-demand business, has challenged that assumption—and may mark the start of a new chapter for SME rescue.

We hosted a conversation with the two professionals who made it happen:

• Tony Groom, Partner at K2 Business Partners, who has spent over 30 years leading hands-on SME turnarounds. Tony was the architect of the operational turnaround strategy that underpinned the plan.

• Andrew Mace, Barrister at Tanfield Chambers, with over 25 years’ experience in insolvency and restructuring. Andrew navigated the legal complexities of applying Part 26A in the SME context and helped secure court sanction.

Together, they shared the inside story of how DSTBTD avoided collapse, why a restructuring plan was chosen over other insolvency tools, and what lessons this case holds for other distressed SMEs.

Why a Restructuring Plan?

DSTBTD’s immediate challenge was a burden of legacy debts, including significant HMRC arrears, that threatened its viability. Traditional SME rescue tools offered no real solution. A CVA could not compromise HMRC’s preferential debts, nor could it exclude key suppliers and subcontractors without disrupting trading. Administration or liquidation appeared to be the only options.

Tony and Andrew identified an opportunity to use a restructuring plan. The strategy: compromise historic debts (including HMRC) while protecting the company’s ability to trade with staff and suppliers uninterrupted.

Andrew stated: “Tony and I have discussed this over a number of years, waiting for an opportune case to appear. Tony found this case. We felt it was suitable because it was quite a simple proposal.”

Managing the Criticism: Cost and Complexity

One of the most common objections to Part 26A plans for SMEs is cost. The process is often criticised for its complexity, with multiple hearings and creditor-class formation exercises driving up professional fees. But in this case, careful project management and a clear division of roles kept costs under control. The operational turnaround was handled in tandem with the legal process. Stabilising cash flow and building stakeholder confidence early reduced friction later on, ensuring suppliers and employees remained supportive throughout.

Tony stated: “We think we’ve come up with a different way of looking at restructuring plans, particularly for small businesses, that can minimise documentation and hopefully will eventually become a much more templated approach.”

What the Plan Looked Like

Andrew and Tony outlined the plan itself: it compromised legacy debts, most significantly HMRC arrears, while ringfencing the company’s trading relationships. By separating current creditors from those tied to historic liabilities, the plan allowed the business to move forward without disrupting day-to-day operations. The court sanctioned the plan, setting an important precedent for SME use of Part 26A.

Tony and Andrew also explained the approach HMRC took as compared to other creditors.

Tony stated: “HMRC was a key party. We adopted the same approach with everyone, but we didnt get the same scrutiny from any of the other creditors.”

The Precedent for SMEs

Until now, restructuring plans were seen as inaccessible for smaller businesses. The DSTBTD case proves otherwise. With the right legal and operational expertise, SMEs with viable business models but crippling legacy debts can use Part 26A to reset their balance sheets without the disruption of administration or liquidation.

Andrew suggested that courts may now be more open to SME restructuring plans, provided applicants can demonstrate both a credible turnaround and a fair process for creditors.

Andrew stated: “This is clearly supportive for those smaller businesses who might not have understood the process and been frightened off by the perceived costs. It confirms what a number of us have been pushing for for some time—that there’s wider adoption of Part 26A by those companies that perhaps cannot make use of a CVA because of a blocking creditor vote.”

Final Word

Tony and Andrew agreed: the restructuring of DSTBTD shows that Part 26A can be a game-changer for SMEs. By marrying legal innovation with operational discipline, companies once thought too small for such tools may now have a viable path to survival in the appropriate circumstances.