Sidley represented Modern Land (China) Co., Limited (“Modern Land”) in the restructuring of its US$1.34 billion offshore dollar-denominated notes. Modern Land is a real estate developer focused on the development of green, energy-saving, and eco-friendly residences in the People’s Republic of China.
The complex transaction was implemented through a scheme of arrangement in the Cayman Islands and parallel recognition proceedings under Chapter 15 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York (SDNY). Through the restructuring, which became effective on December 30, 2022, the existing New York law-governed notes were replaced by a combination of cash and new notes with extended maturity. The new notes are also governed by New York law and are listed on the Singapore Exchange. The scheme achieved the support of creditors representing 94.78% of the total value of scheme claims, notwithstanding a very diversified investor base, and was implemented with the close co-operation of an ad hoc group of bondholders.
On July 18, 2022, the U.S. Bankruptcy Court for the SDNY delivered an order granting recognition of Modern Land’s Cayman scheme as a foreign main proceeding. This decision was of wider significance, confirming that Chapter 15 recognition is effective and binding in discharging New York law-governed debt outside the territorial jurisdiction of the U.S.
The decision of the U.S. Bankruptcy Court extends beyond the restructuring of Modern Land, and will be significant for a number of offshore incorporated businesses who are in the process of launching schemes to restructure New York law-governed debt. We expect to see many more offshore restructurings of New York law-governed debt relying on the Modern Land decision to obtain binding and substantive discharge of that debt under Chapter 15.
The multidisciplinary Sidley team was led by partners Mark Knight (Restructuring), Carrie Li (Capital Markets), and Raymond Oh (China Corporate and Finance). The transaction involved a team working together across several practice areas and offices, including:
- Restructuring (London and Hong Kong): partners Jifree Cader and Gordon Davidson, lead managing associate Luke Mason, managing associate Molly Dyas, and associate Chandon Chahal;
- Restructuring (U.S.): partner Anthony Grossi, managing associate Juliana Hoffman, and associates Charlie Saad and Suzanne Span;
- Capital Markets (Hong Kong and Beijing): counsel Leonard Lou, managing associate Sophie Gu, and associate Robin Liu; and
- Other lawyers involved: partners Olivia Ngan and Desmond Ang, senior managing associate Sandy Yeung, counsel Douglas Tsang, and associate Gigi Ng.