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When should a U.S. bankruptcy court defer to a foreign insolvency proceeding? The question remains complex, even against the relatively settled comity framework established by chapter 15 of the Bankruptcy Code.

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In&nbsp;In re Modern Land (China) Co., Ltd.,&nbsp;Chief Judge&nbsp;Martin Glenn&nbsp;recognized a Cayman scheme of arrangement as a foreign main proceeding under chapter 15, where the debtor, with no financial or operational connection to the Cayman Islands, had obtained overwhelming creditor support for its reorganization.

In&nbsp;In re Xinyuan Real Estate Company Ltd.,&nbsp;Judge&nbsp;Philip Bentley&nbsp;revisited Judge Glenn’s emphasis in&nbsp;Modern Land&nbsp;on creditor preference, but in a different procedural posture: whether a court should abstain under § 305 of the Bankruptcy Code from an involuntary chapter 11 petition in favor of a later-filed Cayman scheme of arrangement. Unlike&nbsp;Modern Land, the debtor was “very far from obtaining overwhelming creditor support or from coming to terms with the petitioning creditors.”&nbsp;and in a different procedural context: abstention.

Finally, in In re Oi S.A., Judge Lisa G. Beckerman focused on the Bankruptcy Code’s abstention and chapter 15 provisions, related title 28 provisions, and congressional purposes, concluding that § 305 does not authorize dismissal of chapter 15 cases, even where the debtor seeks that result to pursue a broader restructuring strategy. Taken together, these decisions show that creditor support can justify deference to a foreign restructuring, but § 305 has limits where creditor consensus is lacking or where dismissal would undermine chapter 15’s statutory framework.

To read the full article, please click <a href="https://www.abi.org/abi-journal/from-modern-land-to-modern-day-section-305-abstention-and-its-boundaries-in-cross">here</a>.

"From Modern Land to Modern Day: Section 305 Abstention and Its Boundaries in Cross-Border Restructurings," by Michael B. Schaedle, Evan J. Zucker, and Jennifer K. Malow was published in the August 2026 edition of the American Bankruptcy Institute's <a href="https://www.abi.org/abi-journal/from-modern-land-to-modern-day-section-305-abstention-and-its-boundaries-in-cross">ABI Journal</a>.

Finance & Restructuring

Michael B. Schaedle

Evan Jason Zucker

Jennifer K. Malow

Cross Border / International

Bankruptcy & Restructuring

Finance

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From Modern Land to Modern Day: Section 305 Abstention and Its Boundaries in Cross-Border Restructurings

From Modern Land to Modern Day: Section 305 Abstention and Its Boundaries in Cross-Border Restructurings

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