And now to the main event…

Creditor-on-creditor violence has been all the rage on Wall Street in recent years, as my loyal readers well know, for one simple reason: Companies can get away with this behavior, which forces their lenders to battle it out for supremacy in their struggling capital structures. Known more formally in banker pillow talk as “liability management exercises,” its recent leading proponents have been Lionsgate, Saks Global, Serta, and TriMark. Attorneys at Kirkland & Ellis and M&A advisors at PJT Partners have been its top practitioners.

But there may be a new trend dawning in the world of corporate bankruptcies. Recently, a trickle—soon to be a steady stream, perhaps?—of U.S.-based companies have bypassed typical Chapter 11 proceedings in the homeland and migrated to the U.K. courts to pull off a restructuring—potentially to the benefit of some creditors and, surprisingly, existing equity holders. In short, the U.K. route is cheaper, faster, avoids the “absolute priority” rule, and gives equity holders in a company a shred of hope that they won’t be wiped out, as is often the case in the States.

In the typical U.S. restructuring process, somebody always gets screwed—often lots of somebodies, perhaps in the form of creditor-on-creditor violence (Lionsgate, Saks) or via subordinated creditors converting their debt to equity and thereby wiping out the existing equity holders (Revco and Federated Department Stores, among many others). In other words, the bankruptcy process in the United States is clever, effective, and gets the job done, but not without some serious pain for the equity holders or debt holders, or even the vulture investors who bought the debt at a discount and end up getting less recovery than they were hoping for. It’s very Darwinian.

The development of distressed U.S. companies looking to the U.K. courts could change that dynamic. Fossil, the Texas-based maker of affordable but stylish watches, crossed the pond to effect the restructuring of its $300 million or so in debt. TI Automotive ($1 billion of liabilities) and McDermott International (more than $1 billion in liabilities) have gone the U.K. route, too.

And then there’s the recent case of Argo Blockchain, a Bitcoin mining company with corporate offices in Delaware that’s listed both on the Nasdaq and in the U.K. In its heyday, Argo had a market value of more than $1 billion. Since then, its stock has fallen 99 percent. Argo is not a big company, but its use of the U.K. courts to restructure its debts is a harbinger of what other companies may soon choose to do to preserve some value for equity holders.

Argo Blockchain had around $143 million of debt in 2022, a year or so after it went public, and managed to be profitable at times thanks to the Bitcoin boom. The company’s debt was reduced to around $75 million in 2023, after a refinancing and asset sales; it also repaid a $35 million secured loan in 2024. That year, Argo had about $47 million in revenue and a net loss of $55 million.

In its financial statements, Argo explained that there was “material uncertainty” about its ability to continue as a going concern. At the time, it had $40 million of 8.75 percent senior unsecured notes—not a lot of debt, mind you, but sometimes even one dollar of debt is too much for a company losing money amid a challenging economic outlook. Attempts to raise new capital in 2025 failed.

That’s when the company turned to the London courts. Last month, using what’s known as a Part 26A restructuring, under the 2006 U.K. Companies Act, Argo was able to revamp its capital structure—converting $40 million of unsecured notes into about a 10 percent stake in the restructured Argo. Another crypto mining company, Growler Mining Tuscaloosa, based in Alabama, agreed to provide Argo with $7.5 million in secured financing during the restructuring, which it then converted to equity. Growler also agreed to invest another $3.5 million of equity in Argo and contribute about $24 million of its crypto mining assets, all of which gave Growler an 87.5 percent stake in the challenged company.

Existing Argo shareholders ended up with 2.5 percent in Argo, which remains listed on the Nasdaq, with a market value these days of around $16 million. The bad news for Growler is that the $35 million or so it invested in cash and assets in Argo last month is now worth around $14 million. But it’s still early days post-deal, obviously, and the stock barely trades, so who knows.

The bigger point is that this was the first time a Nasdaq-listed company was able to restructure in the U.K. without delisting its stock in the U.S., according to John Bringardner, the executive editor of Debtwire. The Argo deal, Bringardner told me, “opens a path to other companies trying to do the same thing” and avoid the higher fees charged by U.S. lawyers, as well as the many motions and procedural steps required by U.S. bankruptcy courts. Then, of course, there’s the fact that the previous equity holders retained some of their preexisting equity. “In a U.S. bankruptcy,” Bringardner continued, “equity is wiped out first. It’s the rare case where you have equity staying intact. So, this is attractive.”

New Fortress Energy, a U.S.-based liquified natural gas company with some $9 billion of net debt and a net leverage ratio of 11.5x, may also go this route, according to Debtwire. Partly owned by billionaire hedge fund manager and Milwaukee Bucks co-owner Wes Edens—the company’s largest shareholder, with a stake of at least 20 percent, according to its 2025 proxy statement—New Fortress has more than $700 million of debt maturing in one year or less, and could have another $5.6 billion due and payable, depending on certain “springing” maturities. In other words, there’s lots of financial pressure on the company, involving blown covenants and potential cross defaults.

New Fortress’s market capitalization of around $375 million is down 97 percent in the past five years. Last year, the company asked to delay filing its third-quarter 2025 financials while it attempted to negotiate a financial restructuring in the face of an upcoming interest payment. And while there has been some good news for New Fortress lately—a new $4 billion, seven-year L.N.G. supply contract with Puerto Rico, as well as several successful L.M.E.s and asset sales in 2024—“the positive momentum comes against a backdrop of unresolved risks,” Debtwire wrote, adding that the company has hired financial and legal advisors. Late last year, New Fortress entered into a forbearance agreement after it failed to make a $30.6 million interest payment on one of its term loans, according to a recent Bloomberg piece.

Why would New Fortress go this route? Debtwire hypothesized that the U.K. process would allow New Fortress to deal with one group of creditors without having to deal with the others, thereby avoiding the “absolute priority” restrictions of U.S. bankruptcy code. And, perhaps most pointedly, Edens would stand a much better chance of preserving his ownership stake. In the U.S., it would be all but certain that New Fortress’s existing equity holders would be wiped out, given the large amount of debt on the company relative to its equity value.

To get a better handle on whether this new phenomenon represents a paradigm shift in corporate restructuring, I rang up Timothy Hynes, the head of credit research at Debtwire. Hynes said he was not surprised that U.S. companies are starting to seek out the U.K. court system to solve their restructuring woes. “The way capitalism works,” he told me, “if it works for somebody, and it makes sense—there’s going to be people running over to the U.K. This appears to have worked, so you could see a stampede of bankruptcies in the U.K. for U.S. companies.”

The only unintended consequence I envision could relate to the situation in which a distressed debt investor buys bonds at a discount with the sole intention of converting them into a controlling equity position in a company as part of a restructuring or bankruptcy proceeding—the way that firms like Apollo once made their bones. But that tactic may become moot in this new paradigm, especially if existing equity holders are able to preserve their positions. That doesn’t mean distressed investors won’t be able to make their return hurdles, but they might have to achieve them through getting a higher interest rate, or warrants, or both, and by making sure they buy at a smart price in the first place.

Anyway, if this does become a thing, we may be seeing a new approach to the bankruptcy process. “Lawyers are definitely pitching this,” Bringardner told me, “and it might actually take off, because it’s effective.”

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