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.
In In re Modern Land (China) Co., Ltd., Chief Judge Martin Glenn 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 In re Xinyuan Real Estate Company Ltd., Judge Philip Bentley revisited Judge Glenn’s emphasis in Modern Land 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 Modern Land, the debtor was “very far from obtaining overwhelming creditor support or from coming to terms with the petitioning creditors.” 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.
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"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 ABI Journal.