Scottish Court Upholds Petrofac CVA in Key HMRC Dispute
A Scottish court upheld Petrofac's CVA against HMRC, impacting future CVA processes.
Why it matters: The ruling emphasizes the legal grounding for CVAs, influencing how similar future corporate restructurings may proceed, impacting legal and economic strategies for distressed companies.
- Petrofac's CVA was approved by 99% by number and 86% by value of creditors.
- HMRC challenged based on National Insurance contributions from 1999 to 2014.
- The restructuring allows Petrofac to prioritize secured creditors and potentially save 3,000 jobs.
- HMRC is currently reviewing the court's decision and evaluating further steps.
A Scottish court upheld the Company Voluntary Arrangement (CVA) for Petrofac Ltd against a challenge from HM Revenue & Customs (HMRC), emphasizing the legal validation of CVAs in UK restructurings.
The CVA, achieving overwhelming support from creditors on January 30, 2026, with 99% approval by number and 86% by value, was contested by HMRC. HMRC focused its challenge on long-standing claims related to National Insurance Contributions from 1999 to 2014. The court's dismissal of the challenge allows Petrofac to continue its restructuring plans.
This arrangement facilitates Petrofac's sale of its Asset Solutions business to CB&I, potentially saving around 3,000 jobs. The sale is described as debt-free and cash-free, projected to yield USD 45–55 million, with proceeds prioritizing secured creditors per the October 2021 intercreditor agreement.
While HMRC is currently reviewing the judgment, their decision on an appeal remains pending. The ruling sets a significant framework for the future handling of CVA negotiations and approvals in the UK, providing a reference point for companies balancing creditor engagements and necessary restructuring efforts.
By the numbers:
- 99% by number — Creditor approval for the CVA.
- 86% by value — Creditor approval for the CVA.
- 45–55 million USD — Expected proceeds from the Asset Solutions sale.
Yes, but: HMRC is reviewing the decision, leaving room for potential appeal.
What's next: Future CVAs may use this ruling as a reference in restructuring negotiations.