2025 Year in Review: Key Trends in Cross-border Restructuring and What’s Next in 2026

When Texas-based McDermott International obtained chapter 15 recognition (in the Southern District of Texas, no less) of UK[1] and Dutch plans to restructure both its funded debt as well as trade and litigation claims—in what was undoubtedly 2024’s cross-border insolvency deal of the year—it was clear that the Model Law on Cross-Border Insolvency had finally arrived. No longer merely a means to obtain ancillary relief in furtherance of a foreign restructuring, chapter 15 of the Bankruptcy Code had demonstrated itself a useful, affirmative tool to achieve restructuring outcomes in a more timely and cost-effective manner than possible under a domestic chapter 11 proceeding.

Because the relief afforded to a foreign debtor is not limited by the four corners of the domestic Bankruptcy Code (more on that below), the art of the possible is largely defined by the limits of practitioners’ imaginations and the jurisdictional ability to open the bankruptcy courthouse doors via chapter 15 recognition. In 2025, both concepts were explored in high-profile decisions that addressed (1) creative forum selection and the contours of COMI; (2) workarounds for third-party releases and related relief in the wake of Purdue; and (3) debtor eligibility.

Creative Forum Selection

The Mega Newco restructuring in many ways picked up where McDermott left off in pushing the boundaries of permissible forum selection and COMI engineering in chapter 15.  Mega Newco, an English-incorporated special purpose subsidiary, was created solely to facilitate an English scheme of arrangement that restructured New York law–governed notes issued by its Mexican parent.  The English court approved the scheme, and Mega Newco sought chapter 15 recognition and enforcement in the bankruptcy court for the Southern District of New York (“SDNY”). Judge Wiles recognized the English scheme proceeding as a foreign main proceeding and enforced the English court’s order in the United States.[2]

The court acknowledged the structural risks inherent in allowing a newly formed entity with no operating history to serve as the restructuring vehicle, emphasizing that—taken to its extreme—such a structure could hollow out chapter 15’s COMI requirements (i.e., the requirement that a debtor have its “center of main interests” in the jurisdiction where the foreign proceeding is pending).  Nonetheless, the court declined to disregard the form of the transaction as structured by the parties.  Critical to its analysis was the absence of creditor objection, the overwhelming creditor support for the scheme, and the fact that the restructuring enhanced creditor recoveries rather than undermining legitimate expectations. The court stressed that COMI analysis must remain contextual and creditor-focused, rather than rigidly formalistic.

Mega Newco is therefore best understood not as a blanket endorsement of “manufactured COMI,” but as a fact-specific holding grounded in creditor consent, procedural fairness, and chapter 15’s statutory purpose of facilitating efficient cross-border restructurings.  The decision leaves open the possibility that similar structures could be rejected where creditor expectations are frustrated or where the structure is deployed opportunistically.

After Mega Newco, the Fossil Group restructuring—whereby a U.S. issuer, with the support of its major noteholders, amended the governing law on its notes to English law; created a UK subsidiary to guarantee the notes; restructured the notes through a Part 26A restructuring plan in England; and obtained chapter 15 recognition of the plan—was the next logical step.[3] In support of the UK plan, the Fossil Group debtors submitted an expert opinion authored by Lehman bankruptcy judge (and MoFo alum) James Peck.

Recognizing (as Judge Wiles did in connection with Mega Newco) that the transaction was “opportunistic,” “innovative,” and “unconventional given its relationship to a U.S. enterprise with U.S. public debt securities,” Judge Peck reasoned that the Fossil strategy was nonetheless “a form of what [he] consider[ed] to be ‘good’ forum shopping”—a view apparently shared by the English judge in sanctioning the restructuring plan and Judge Lopez in granting it recognition under chapter 15.[4]

What’s Next in 2026

While McDermott, Mega Newco, and Fossil all pushed the envelope in terms of structure and engineering, each proceeded (at least eventually) on a consensual basis without opposition from affected creditors. As alluded to by Judge Wiles in approving recognition of the Mega Newco scheme, what can be achieved via consensus is not necessarily indicative of what a judge might approve over the objection of an adversely affected financial stakeholder. As Fossil-style structures become more mainstream, sooner or later a court will be tasked with calling balls and strikes on questions of COMI-manipulation and good-versus-“bad” forum shopping.

Although subordinate to the choice of foreign law and forum, practitioners also must decide on the domestic venue in which to seek recognition under chapter 15. And for all that’s been said about the ascendancy of Houston or Trenton as the new venues for domestic restructurings, SDNY has remained the venue of choice for high-stakes chapter 15 filings (indeed, all but two of the 2025 decisions discussed herein were filed in New York). With the announcement of the upcoming retirement of Judge Glenn—perhaps the most prominent chapter 15 jurist currently on the bench—whether SDNY will retain its status as the top filing destination in 2026 and beyond remains to be seen.

Workarounds for Third-Party Releases

The U.S. market continued its search for creative workarounds to obtain the economic equivalent of third-party releases through cross-border pathways, without running afoul of the Supreme Court’s holding in Purdue.[5]

In April, an SDNY bankruptcy court recognized the Brazilian judicial reorganization of the Odebrecht group as a foreign main proceeding and enforced the Brazilian plan in the United States.[6]  The sole objection came from the U.S. Trustee, who argued that provisions in the proposed recognition order—particularly exculpations and injunctive relief—amounted to impermissible non-consensual third-party releases in violation of Purdue (irrespective of their previous acceptance in chapter 15 practice prior to Purdue).

Judge Glenn overruled the objection; assuming without deciding that the recognition order functioned as a non-consensual third-party release, he concluded it permissible to enforce such relief contained a foreign plan approved by a court of competent jurisdiction. The court reasoned that chapter 15 courts possess exceedingly broad discretion under Bankruptcy Code sections 1507 and 1521 to grant “any appropriate relief,” subject only to the requirements of sufficient creditor protection and the public-policy exception of section 1506.  Characterizing the “Supreme Court’s holding [as] narrow” and confined by its text to “Chapter 11 cases,” the court determined that Purdue “cannot be read to hold that nonconsensual third-party releases are ‘manifestly contrary’ to U.S. public policy such that they would be barred by section 1506” of the Bankruptcy Code.

A Delaware bankruptcy court was faced with a similar question—and reached the same conclusion—in Crédito Real, overruling the objection of the U.S. International Development Finance Corporation (“DFC”)[7] and finding that third-party releases granted as part of the debtor’s Mexican concurso plan could be recognized and enforced under chapter 15.[8]

The issue had also been teed up in the Yuzhou Group cases pending in SDNY,[9] where Judge Beckerman was asked to rule on the validity of third-party releases in a Hong Kong scheme of arrangement, again over the objection of the U.S. Trustee. That objection was resolved prior to scheduled oral argument by a revised recognition order clarifying that the debtor did not seek enforcement of any “non-consensual” third-party releases (while punting on the question of whether any given release was consensual or not).

What’s Next in 2026

Although a smattering of decisions at the bankruptcy court level have upheld the pre-Purdue consensus with respect to third-party releases under chapter 15, there have been no district- or circuit-level decisions since Purdue. The Crédito Real recognition decision has been appealed, however, so expect greater clarity when the district court (and, potentially, the Third Circuit in the event of a further appeal) issues its decision.

Regardless, practitioners should bear in mind that approval of a foreign third-party release was never intended to be a perfunctory, “check-the-box” exercise, even before Purdue: a foreign representative seeking approval of releases was always required to demonstrate that there was procedural and substantive fairness to creditors with respect to the releases under applicable foreign law.[10] Given the anticipated proliferation in creative cross-border transaction structures in the vein of McDermott or Fossil, it is all but inevitable that a bankruptcy judge will soon be forced to decide whether a U.S. debtor that has engaged in aggressive COMI-shifting behavior is entitled to third-party releases obtained under an Irish scheme or a Mexican concurso that otherwise would be denied to it under chapter 11.

The Importance of Debtor Eligibility

Often overlooked as a technicality until it is too late, eligibility can determine whether chapter 15 is available at all, and the line between a viable chapter 15 case and a dismissed petition may turn on formal legal status rather than restructuring equities.

In July 2025, Judge Bentley issued a modified bench ruling in the long-running saga of B.C.I. Finances Pty Ltd and its affiliates, which have been the subject of eleven separate chapter 15 filings since 2017.[11] The latest ruling granted recognition as a foreign main proceeding of the Australian liquidation for an entity previously known as Shield Holdings over objections raised by the former family owners of the broader B.C.I. enterprise. They argued that Shield was not eligible to be a debtor under Bankruptcy Code section 109(a) because it lacked “property in the United States,” as its only assets were funds in an attorney retainer account established shortly before the chapter 15 filing.

The court rejected that argument, finding that section 109(a) is unambiguous and requires only that the debtor have some property in the United States, regardless of size, timing, or purpose.  It declined to graft qualitative limitations onto the statute, emphasizing that it is not the judiciary’s role to add “teeth” that Congress did not include. The court also rejected the objectors’ argument that a literal reading of section 109(a)—under which virtually any entity could be eligible for chapter 15 merely by depositing funds with a U.S. attorney—would produce an “absurd result,” observing it to be “eminently plausible that Congress meant to set an extremely low bar to chapter 15 eligibility . . . while at the same time giving bankruptcy courts broad discretion to decline to exercise jurisdiction, or to tailor the relief they grant, when the circumstances warrant.”

The outcome in B.C.I. Finances stands in contrast to the fate of Silicon Valley Bank’s Cayman liquidators, who in February saw the S.D.N.Y. district court affirm Judge Glenn’s 2024 ruling denying recognition of the SVB Cayman liquidation under chapter 15.[12]

The Cayman joint official liquidators had sought recognition of a Cayman liquidation proceeding for SVB’s Cayman branch following the bank’s collapse and FDIC receivership. The district court agreed with the bankruptcy court that SVB Cayman was not a separate legal entity, but merely a branch of an FDIC-insured U.S. bank.  As such, the court concluded that it fell squarely within the provisions of section 109(b) (which apply in chapter 15 by virtue of section 1501(c)(1)), rendering banks ineligible to be debtors under the Bankruptcy Code.

The liquidators’ arguments that the branch had been “orphaned” or transformed into a separate Cayman insolvency estate were rejected as inconsistent with U.S. banking law and the statutory purpose of preserving the FDIC’s exclusive resolution regime.  With the withdrawal of their appeal of the district court’s ruling to the Second Circuit (as well as other unfavorable rulings in parallel federal court litigation against the FDIC), the Cayman liquidators’ path to obtaining vindication for Cayman depositors left out in the cold by the FDIC has narrowed considerably.

What’s Next in 2026

The SVB Cayman decision may presage the increased prominence of eligibility in future disputes over recognition. As practitioners use chapter 15 to further push the envelope to achieve increasingly aggressive outcomes, objectors will look for “clean” dismissal theories that leave little to no discretion to the bankruptcy judge.

[1] Morrison Foerster was engaged by a major creditor in connection with the contested sanction proceedings and a potential challenge to U.S. recognition of the McDermott Part 26A scheme in the U.K.

[2] In re Mega Newco Ltd., No. 24-12031 (MEW), 2025 WL 601463 (Bankr. S.D.N.Y. Feb. 24, 2025).

[3] In re Fossil (UK) Global Services Ltd, Case No. 25-90525 (CML) (Bankr. S.D. Tex. Nov. 12, 2025).

[4] See Josh Neifeld, Fossil’s ‘Stapled Exchange’ and the ‘International Two-Step’: Why a US Company Turned to London to Restructure Its Notes and How It Did It, Octus (Dec. 2, 2025).

[5] See Harrington v. Purdue Pharma L.P., 603 U.S. 204 (2024).

[6] See In re Odebrecht Engenharia e Construção S.A., 669 B.R. 457 (Bankr. S.D.N.Y. 2025).

[7] Morrison Foerster represents DFC in the Crédito Real chapter 15 case and currently pending appeal of the bankruptcy court’s recognition decision.

[8] See In re Crédito Real, S.A.B. de C.V., SOFOM, E.N.R., 670 B.R. 150 (Bankr. D. Del. 2025).

[9] See In re Yuzhou Group Holdings Company Limited, Case No. 24-11441 (LGB) (Bankr. S.D.N.Y. 2024).

[10] See, e.g., Ad Hoc Group of Vitro Noteholders v. Vitro S.A.B. de C.V. (In re Vitro S.A.B. de C.V.), 701 F.3d 1031, 1067 (5th Cir. 2012).

[11] In re B.C.I. Finances Pty Limited (In Liquidation), Case No. 17-11266 (PB) (Bankr. S.D.N.Y. Jul. 8, 2025).

[12] In re Silicon Valley Bank (Cayman Islands Branch), 2025 WL 448403, Case No. 24-cv-1871 (LGS), (S.D.N.Y. Feb. 10, 2025).