U.S. Bankruptcy Court Enforces New Fortress Energy’s UK Restructuring Plans, but Warns Against Abusive “COMI Tourism”

The opinion is significant because it addresses an increasingly common restructuring strategy: A U.S.-based company establishes or uses UK-based affiliates to propose a scheme of arrangement under Part 26, or a restructuring plan under Part 26A, and then seeks chapter 15 recognition in the United States after the UK court sanctions the plan. The Court noted that this approach may be viewed as faster and less expensive where the company needs only a balance sheet restructuring rather than a full operational restructuring.

The New Fortress Restructuring
New Fortress Energy Inc. is a Delaware corporation based in New York. The chapter 15 debtors, NFE Global Holdings Limited and NFE Brazil Newco Limited, are UK-incorporated affiliates. NFE Global was incorporated in the UK in 2021. NFE Brazil was incorporated in April 2026, shortly before the English proceedings, and was formed specifically to promote the restructuring of the group’s Brazil-related business.

The restructuring plans were designed to reduce the New Fortress group’s funded debt owed to external creditors from approximately $5.7 billion to less than $1 billion, exchange existing debt for new debt and equity, and separate the group into two independent companies: BrazilCo and CoreCo. Existing shareholders would retain 35% of CoreCo common stock before dilution from the management incentive plan and convertible preferred equity.

The plans also included broad releases and exculpation provisions covering the debtors, other group companies, certain creditors, advisors, affiliates, directors, officers, employees and other related parties, subject to customary carve-outs including criminal acts, fraud, gross negligence and willful misconduct.

The restructuring plans were approved with unanimous support in six of seven classes, and the remaining class voted 99.84% in favor. Only one plan creditor, holding less than 0.1% of the total plan debt, voted against one of the plans. The foreign representative also submitted an Alvarez & Marsal (A&M) recovery analysis, which compared creditor recoveries under the UK plan structure to creditor recoveries if CoreCo filed for chapter 11 and BrazilCo was sold in an out-of-court sale process. A&M’s analysis concluded that all plan creditors would receive a better outcome under the UK restructuring plans than under the relevant alternative. Notably, the legacy noteholders—the only class in which any creditors voted against the plans—were projected to recover 26% under the restructuring plans, compared with 13% under the relevant alternative.

Why the Bankruptcy Court Granted Recognition and Enforcement
The Court first found that the debtors satisfied the eligibility requirements for chapter 15. The debtors had property in the United States in the form of a retainer held by U.S. counsel in New York and rights under U.S. dollar-denominated debt instruments governed by New York law.

The Court then found that the English proceedings qualified as foreign main proceedings. The debtors were incorporated in England and Wales and had registered offices in England, creating a presumption that England was their center of main interests, or COMI. The Court also noted that the debtors’ books and records were maintained in England, each debtor maintained a UK bank account, a UK company served as corporate secretary, and the foreign representative was an English citizen and resident who served as a director of both debtors.

Having granted recognition, the Court enforced the restructuring plans, including the plan releases, under sections 1521 and 1507 of the Bankruptcy Code. The Court emphasized that discretionary relief under section 1521 may be granted only if the interests of creditors and other interested parties are “sufficiently protected.” That requirement includes the just treatment of creditors, protection of U.S. claimants against prejudice and inconvenience, and distribution substantially in accordance with U.S. priority principles.

On just treatment, the Court stated that the Bankruptcy Code requires it to consider whether recognition and enforcement of the scheme or restructuring plan will reasonably assure fair treatment of all holders of claims against, or interests in, the debtor’s property. The Court found that “[t]he record reflects that creditors were treated fairly in the English Proceedings,” including with respect to releases, because applicable law provides a comprehensive procedure for the orderly and equitable distribution of the debtor’s assets among creditors, and so further relief in the United States was permitted under the Bankruptcy Code.

Several facts supported that conclusion. Creditors received notice and multiple opportunities to review, consider and object to the restructuring plans and releases. Creditors were entitled to be heard at both the convening and sanction hearings. They received an explanatory statement serving a function comparable to a disclosure statement under section 1125 of the Bankruptcy Code. The restructuring followed months of negotiations among sophisticated parties. No plan creditor objected to the releases at the sanction hearing, and no party objected to recognition in the chapter 15 case.

Citing the A&M alternatives analysis, the Court also relied on the fact that all plan creditors were projected to receive better recoveries under the restructuring plans than under the relevant alternative. That evidence helped support the Court’s conclusion that creditors were not being disadvantaged by the UK restructuring and chapter 15 recognition structure.

Finally, the Court concluded that enforcement of the restructuring plans, including the releases, was not manifestly contrary to U.S. public policy under section 1506. The Court noted that U.S. courts have repeatedly recognized foreign restructuring plans containing non-debtor releases in chapter 15 cases, and it saw no reason to deviate from that precedent.

The Court’s Warning on “COMI Tourism”
Although the Court granted relief, it used the opinion to caution against possible abuse of UK plan-company structures. The Court observed that Part 26 schemes and Part 26A restructuring plans allow companies to restructure tranches of debt without placing the entire enterprise into chapter 11. But it also warned that, by establishing a UK affiliate to file under Part 26 or Part 26A, a debtor might attempt to circumvent the requirements of the U.S. Bankruptcy Code to disadvantage some creditors.

The Court drew an important distinction between the UK “sufficient connection” test and the U.S. chapter 15 COMI analysis. A company may be eligible to use a UK scheme or restructuring plan because it has a sufficient connection to England, but chapter 15 recognition as a foreign main proceeding requires COMI in the foreign jurisdiction. Those standards are not the same.

Accordingly, where a Part 26 scheme or Part 26A plan is used to restructure the debt of a non-UK company, the Court stated that a chapter 15 court should scrutinize COMI closely to ensure that the foreign proceeding has not been used unfairly to favor one creditor group over another or to achieve a result that could not be achieved in chapter 11. Insider exploitation, untoward manipulation or overt thwarting of creditor expectations may support denial of recognition or enforcement.

The Court found no such abuse in New Fortress. There were no objections, creditors overwhelmingly supported the restructuring, affected creditors had notice and hearing rights in the English proceedings, and the A&M analysis showed better projected recoveries under the restructuring plans than under the relevant alternative. In those circumstances, the Court concluded that the plans were not the product of exploitation or improper manipulation.

Conclusion
The New Fortress decision confirms that UK restructuring plans remain a viable tool for U.S.-based companies seeking to restructure New York-law governed debt through chapter 15, particularly where the company needs a balance sheet restructuring rather than the broader operational tools of chapter 11.

But the decision is not a blank check. Future debtors using UK plan companies should expect courts to examine COMI, creditor expectations, the fairness of the foreign process, the treatment of dissenting creditors and whether creditors are “sufficiently protected” under section 1522(a). A strong record of creditor support, procedural fairness and improved recoveries may support recognition. A record suggesting insider exploitation, creditor prejudice or manipulation of COMI will not.