A U.S. judge on Monday approved Chinese property developer Modern Land (China) Co.’s proposed reorganization plan in the Cayman Islands under U.S. law, including the cancellation of roughly $1.4 billion in dollar-denominated debts, WSJ Pro reported. The decision pushes back against the thrust of a May court ruling from Hong Kong justices seeking to limit the international scope of rulings by U.S. bankruptcy courts. Modern Land, a Cayman Islands-registered property developer that specializes in sustainable projects in mainland China, filed for a reorganization plan in the Caymans in April after failing to refinance two bonds that came due in October and February, court papers show. The Beijing-based developer in June sought U.S. court approval of the Caymans plan, also known as a chapter 15 bankruptcy, which would cancel some $1.4 billion of existing dollar bonds governed by New York law and offer creditors new dollar-denominated debts. Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York on Monday approved the scheme to allow the restructuring to proceed. The ruling is at odds with a recent court decision in Hong Kong that cast doubts over whether judges’ chapter 15 rulings are binding outside of the U.S., as well as if dollar-creditors residing in mainland China and Hong Kong are required to abide by their decisions. In an opinion about the recognition of Bermuda-registered Rare Earth Magnesium Technology Group’s reorganization plan in Hong Kong, justices said that based on their interpretation of U.S. bankruptcy case law, a recognition of a foreign restructuring under chapter 15 would only have implications for creditors residing inside the U.S.
