U.S. Bankruptcy Court Can Enforce Foreign Restructuring Plan Providing for Cancellation of U.S. Law-Governed Debt

Summary

This article discusses a recent case filed under Chapter 15 of the Bankruptcy Code. Even before Chapter 15 of the Bankruptcy Code was enacted in 2005 to govern cross-border bankruptcy proceedings, the enforceability of a foreign court order approving a restructuring plan that modified or discharged U.S. law-governed debt was well recognized under principles of international comity. The U.S. Bankruptcy Court for the Southern District of New York recently reaffirmed this concept in In re Modern Land (China) Co., Ltd., 641 B.R. 768 (Bankr. S.D.N.Y. 2022). The court granted a petition seeking recognition of a debtor's Cayman Islands restructuring proceeding under Chapter 15 for the purpose of enforcing a court-sanctioned scheme of arrangement that canceled New York law-governed notes in exchange for new notes (also governed by New York law).