I disagree with this. The step forward creates an exception "A compulsory move specified by the rules can temporarily force a battle group out of formation until it reforms". The unit can't yet reform, as it is in close combat.
The reform rules state "A battle group must reform if it is to make any voluntary move. (Other than to feed more bases into an existing melee)." This clearly allows a BG that has not yet reformed to feed in more bases.
A nice summary that I agree with.
However the expansion rules also say "If there is space to do so".
So this is the crux for me.
Do the bases that are expanded have to be in edge and corner to corner contact? (i.e. a normal "legal" formation)
Or are they allowed to be in an "illegal" stepped formation as in Phil's original example?
This was basically the point that Phil and I were discussing during the game.