By Gerard McCormack

UK Cross Border Insolvency and Restructuring Law is a fascinating and interesting subject which is constantly the subject of debate. This matter is highlighted by the fact that since the book has been submitted for publication an increasing number of UK restructuring plans and schemes of arrangement appear to have come before the US courts for recognition and enforcement under Chapter 15 of the US Bankruptcy Code. These issues are addressed to some extent in Chapters 2, 5, 6 and 7 of UK Cross Border Insolvency and Restructuring Law.

Chapter 15 is effectively the US equivalent of the UK’s Cross Border Insolvency Regulation (SI No 1030/2006) and implements the UNCITRAL Model Law on Cross Border Insolvency in the US. Nevertheless, the manner and mode of implementation is somewhat different between the two countries.

There has been an important ruling from New York Chief Bankruptcy Judge Martin Glenn on 14^th July 2026^[1] placing guardrails on the US recognition and enforcement of UK modification of US law governed debt.

It is important to note that a foreign registered debtor may be restructured by means of UK scheme of arrangement or restructuring plan if the debtor is ‘sufficiently connected’ with the UK but the connection test under Chapter 15 is significantly different.  Chapter 15 requires either a COMI in the relevant jurisdiction for prima facie automatic recognition and enforcement or an establishment in that jurisdiction for discretionary recognition and enforcement.

The ruling of Martin Glenn J articulates the analytical framework that will be applied when US based corporate groups establish UK affiliates to restructure NY governed debt through the UK courts. The US court observed that UK schemes and plans ‘often include releases of non-debtor affiliate guarantees of the original debt, as well as broad exculpation protection’ that ‘push the boundaries of available relief in a chapter 11 case.’ The court considered it important to set out these guardrails even though Chapter 15 relief was granted in this particular case and the UK plans recognised and enforced. There was a high degree of creditor consensus with near unanimous creditor approval. Moreover, there was ample notice of the proceedings to creditors and also evidence that the UK plan was likely to produce significantly more for creditors than the counter-factual alternative of a US Chapter 11 process. 

Nevertheless, the court spoke of the dangers of ‘COMI tourism’ and identified the risk that a debtor may use a newly established UK affiliate ‘to circumvent the requirements of the US Bankruptcy Code to disadvantage some creditors.’

‘Following Brexit, cross-border insolvency law in the UK is no longer governed by the European Insolvency Regulation, but by autonomous national law. McCormack succeeds impressively in presenting the relevant case law and underlying rules with crystal clarity. He has clearly written a long-awaited standard work.’
– Reinhard Bork, University of Hamburg, Germany

The US court suggested that ‘[i]nsider exploitation, untoward manipulation, and overt thwarting of third-party expectations may result in a refusal to recognize” a foreign scheme plan for bad-faith COMI manipulation.

The US court also invoked the detailed requirements of Chapter 15 implementing the Model Law more or less in the same way here as it has been done in the UK.  Chapter 15 required just treatment of all claimholders, the protection of US claimants against prejudice and inconvenience in the processing of claims, and distribution substantially in accordance with US priorities and the US court opined that this was ‘a helpful guardrail to protect creditor interests.’

On another guardrail – manifest incompatibility of the foreign scheme or plan with US public policy – the court noted that the releases in this case extended well beyond the two plan companies, covering group members, plan creditors, advisers and related parties but subject to carve-outs including fraud, gross negligence or willful misconduct. The court enforced the releases in full.  It positioned its decision within an established line of authority that Chapter 15 courts may enforce foreign plan releases even if those provisions could not be entered in a plenary case under Chapter 11 of the US Bankruptcy Code. The opinion acknowledged the commercial logic of such provisions.   Releases of affiliate guarantees are commonplace in UK schemes and plans because, if ‘ricochet’ claims against affiliate guarantors remained possible, the scheme or plan would fail.

One issue not however addressed by Glenn J is the Gibbs rule which appears to require UK proceedings for the modification of UK law governed debt.  The US does not appear to have such an equivalent rule.

‘This new text from Professor McCormack is packed with perceptive insights by one of the leading UK scholars on both cross-border insolvency law and restructuring law. The author deploys his vast experience and incisive powers of legal analysis to produce an essential commentary on these increasingly overlapping topics. This up-to-date text covers the various UK restructuring tools and the mechanisms for cross-border insolvency cooperation post Brexit. It is highly recommended for both academics and practitioners.’
– David Milman, Lancaster University, UK

UK Cross Border Insolvency and Restructuring Law in chapter one at p 15 fn 53 notes the Court of Appeal decision in Servis Terminal LLC v Drelle [2025] EWCA Civ 62 that an unregistered foreign judgment cannot form the basis of a bankruptcy decision.  The footnote notes that the case is currently under appeal to the UK Supreme Court.  The UK Supreme court has now unanimously overturned the Court of Appeal decision. [2]The decision confirms that creditors who hold judgments from jurisdictions with no recognition treaty or statutory registration regime may rely on such judgments to commence UK bankruptcy proceedings directly. 

The UK Supreme Court relied on the long established common law principle that a final and conclusive foreign money judgment gives rise to an obligation to pay that can qualify as a ‘debt’ for bankruptcy purposes. Recognition proceedings are not a prerequisite to establishing the existence of that debt.

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[1] judge-glenn-nfe-chapter-15-opinion.pdf. See also NFE Global Holdings Ltd & Anor, In the Matter Of [2026] EWHC 1620 (Ch) (18 June 2026).

[2] Valeriy Ernestovich Drelle (Respondent) v Servis-Terminal LLC (In Liquidation in the Russian Federation) (Appellant) – UK Supreme Court

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Gerard McCormack, Professor of International Business Law, University of Leeds, UK