Geoff O’Dea

Petrofac: the unanswered question of fair allocation

The Court of Appeal’s recent decision in Saipem S.P.A and Ors v Petrofac Limited & Ors [2025] EWCA Civ 821, overturning Marcus Smith J’s decision in the High Court ([2025] EWHC 1250 (Ch)) (Petrofac), has generated substantial comment. This is the third Court of Appeal decision on Pt 26A of the Companies Act 2006, the other two being Kington S.A.R.L. & Another v Thames Water Utilities Holdings & Ors ([2025] EWCA Civ 475) (Thames Water) and Strategic Value Capital Solutions Master Fund LP v AGPS Bondco PLC ([2024] EWCA Civ 24) (Adler). The main issues addressed in Petrofac were whether the position of creditors who were “out of the money”¹ in the relevant alternative (insolvency, as in all three cases) could be disregarded when considering whether the benefits generated or preserved by the restructuring had been allocated fairly, and the proper approach to evaluating what constitutes a “market return” for new money advanced under a restructuring plan.