The United States Bankruptcy Court for the Southern District of New York (Court or New York Court) has denied Xinyuan Real Estate Company Ltd. (Xinyuan or Debtor)’s motion to dismiss an involuntary chapter 11 case filed against it by a group of noteholders.

The ruling, made on March 3, 2026, has implications for the interplay between United States bankruptcy proceedings and foreign schemes of arrangement, particularly when the foreign scheme is at an impasse.

Below, we discuss the background of the decision and its practical implications for foreign companies.

On August 17, 2023, China Evergrande Group, one of China’s largest real estate developers, and its affiliates filed chapter 15 petitions in the US Bankruptcy Court for the Southern District of New York in Manhattan seeking recognition of foreign restructuring proceedings in the High Court of Hong Kong and in the High Court of the Eastern Caribbean Supreme Court in the British Virgin Islands.

In Harrington v. Purdue Pharma, the US Supreme Court in a 5-4 decision held that the US Bankruptcy Code does not permit a debtor to confirm a chapter 11 plan that releases non-debtors from similar or related claims the creditors could assert directly against them.

An opinion issued in connection with the bankruptcy cases of Lyondell Chemical Company and its affiliates may have significant implications for shareholders who receive payments in connection with a leveraged buyout when the underlying company subsequently files for bankruptcy. 

On August 17, 2023, China Evergrande Group, one of China’s largest real estate developers, and its affiliates filed chapter 15 petitions in the US Bankruptcy Court for the Southern District of New York in Manhattan seeking recognition of foreign restructuring proceedings in the High Court of Hong Kong and in the High Court of the Eastern Caribbean Supreme Court in the British Virgin Islands.