S.D.N.Y. recognizes In re ARD Finance as the first Chapter 15 “foreign main proceeding” under Luxembourg’s 2023 restructuring statute

The bottom line

Judge Glenn recently became the first U.S. bankruptcy judge to recognize a Luxembourg judicial reorganization by collective procedure (the Luxembourg Proceeding or JRP) as a “foreign main proceeding” under Chapter 15 of the Bankruptcy Code. This is the first time a U.S. court has considered whether a proceeding under Luxembourg’s restructuring law qualifies for recognition as a foreign proceeding under Chapter 15.

Background

The Luxembourg Law of 7 August 2023, on business preservation and the modernization of bankruptcy law took effect on November 1, 2023, incorporating an EU restructuring directive into Luxembourg law. It replaced the concordat préventif de faillite regime with a modern, preventive framework built around two restructuring tools: reorganization by amicable agreement, an out-of-court negotiation framework aimed at facilitating settlement agreements, and judicial reorganization by collective procedure, a court-supervised process where the debtor normally retains control as a debtor in possession and creditors vote on a plan. In a judicial reorganization by collective procedure, a debtor may request a stay on collection proceedings. The law also provides for a cross-class cramdown mechanism allowing a restructuring plan to bind dissenting classes of creditors. The judicial reorganization process aims to preserve the continuity of a debtor under the supervision of the court.

The debtor (the Debtor) is a holding and financing entity within Ardagh Group S.A. (AGSA), a supplier of metal and glass packaging, which by mid-2025 was overburdened with more than $4 billion in debt. In re ARD Finance, S.A., No. 25-12794 (MG), at 6. That debt included almost $2 billion in PIK notes due in 2027 and secured by the equity in AGSA (the PIK Notes). Id. at 5-6. AGSA had also issued a series of senior secured notes (the SSNs) and senior unsecured notes (the SUNs). Id. at 10.

In the summer of 2025, AGSA announced a debt-for-equity swap of certain of its funded indebtedness as part of an overall deleveraging transaction that would also provide approximately $1.5 billion in new capital (the Recapitalization Transaction). Id. at 7. The parties to the Recapitalization Transaction included AGSA, Paul Coulson (its controlling equity owner), SSN noteholders, SUN noteholders, and holders of both SUNs and PIK Notes (the Cross-Holders and, together with the SSN noteholders and SUN noteholders, the Consenting Creditors). Id. at 11-12.

The Recapitalization Transaction would provide Coulson with a $300 million consent payment and the SSN noteholders with takeback paper, and would equitize the remaining funded debt, with the SUN noteholders — including the Cross-Holders — receiving 92.5% of the equity in Coulson’s investment vehicle Yeoman Capital S.A. (EquityCo) and the PIK noteholders only 7.5%. Id. at 12, 15.

The Debtor sought to facilitate the Recapitalization Transaction through a consent solicitation that launched on September 29, 2025, but was unable to obtain the necessary consent thresholds. Id. at 14. Instead of moving forward with the consent solicitation, AGSA announced it had entered a “Restructuring Implementation Agreement” (the RIA) with the parties to the Recapitalization Transaction on November 12, 2025. Id. at 14. Pursuant to the RIA, the Cross-Holders, which held approximately 80% of the PIK Notes, directed the collateral agent to foreclose on the shares in AGSA that secured the PIK Notes, thereby stripping the PIK noteholders of their equity interest in AGSA. Id. at 15-16. The foreclosed shares were transferred directly to EquityCo, and the minority PIK noteholders who were not Cross-Holders received only 7.5% of the equity in EquityCo, while the SUN noteholders received 92.5%. Id. at 12, 14. 

The recognition proceeding

AGSA filed a petition for recognition of the Luxembourg Proceeding as a “foreign main proceeding” under Chapter 15 of the Bankruptcy Code. Id. at 2-3. The petition was filed before the Luxembourg court approved a plan of reorganization. Id. at 2. The Luxembourg court has since approved the plan.

An ad hoc group of PIK Noteholders (the PIK AHG) objected to recognition. First, the PIK AHG argued that recognition of the JRP would be “manifestly contrary” to U.S. public policy because the Luxembourg Proceeding had so far failed to address the legitimacy of the Coulson consent payment, thereby threatening the PIK AHG’s due process rights. Id. at 15, 18. The PIK AHG claimed that this payment violated the absolute priority rule, id. at 18-19, and further alleged certain improprieties with the JRP voting process. See id. at 19-20. 

The foreign representative responded that the PIK AHG failed to show that recognition would be manifestly contrary to U.S. public policy because its objection focuses on the Recapitalization Transaction — not the Luxembourg Proceeding itself — and failed to demonstrate any prejudice it would face if recognition were granted. Id. at 24-25. The foreign representative argued that the Luxembourg District Court was the appropriate forum for its claim that the scope of the JRP was too narrow. Id. at 25.

Second, the PIK AHG argued that the Luxembourg Proceeding was not sufficiently “collective” to qualify as a foreign proceeding under Section 101(23) of the Bankruptcy Code, primarily because the Luxembourg Court denied the PIK AHG’s motion to intervene in the JRP. Id. at 20-21. The PIK AHG further noted that because its security interests in the AGSA equity were stripped through the Recapitalization Transaction, the PIK Notes were classified as unsecured claims in the JRP. Id. at 21. As a result, the PIK AHG argued that its vote to reject the plan in the JRP would have been swamped by “insider” unsecured creditors, id. at 21, and as the PIK would not be able to challenge classification in the Luxembourg proceeding, the JRP is not a “collective” proceeding. Id. at 21-22.

The foreign representative responded that the Luxembourg Proceeding was collective because Luxembourg’s Restructuring Law gives the Luxembourg District Court authority to approve a restructuring plan that is binding on all affected creditors after it is debated and approved by the requisite majorities. Id. at 22.

The Luxembourg Proceeding is a “foreign main proceeding”

Judge Glenn overruled the PIK AHG’s objections and found that the Luxembourg Proceeding satisfied the requirements for recognition under Chapter 15 of the Bankruptcy Code. The Court walked through each of the requirements for eligibility under Chapter 15 in detail. 

As an initial matter, the Court concluded that the Debtor was eligible to be a debtor under Chapter 15 of the Bankruptcy Code because (i) the Debtor paid a retainer to its U.S. restructuring counsel and (ii) the Debtor’s funded debt was governed by New York law with a New York forum selection clause. See, e.g., In re Serviços de Petróleo Constellation S.A., 600 B.R. 237, 268 (Bankr. S.D.N.Y. 2019). 

The Court then considered whether the Luxembourg Proceeding constituted a “foreign main proceeding” under Section 1502 of the Bankruptcy Code. The Court found that the Luxembourg Proceeding was a “foreign proceeding” because it operated in accordance with strict statutory requirements, division of classes of creditors and robust voting procedures, and was in the best interests of creditors. In re ARD Finance, S.A., No. 25-12794 (MG), at 40. 

Focusing on the “collective” nature of a proceeding, Judge Glenn wrote that “whether a proceeding is collective is whether all creditors’ interests were considered in the proceeding.” Id. at 40. The Court held that the PIK AHG failed to provide sufficient evidence that the Luxembourg proceeding did not consider the rights of all creditors and its assertion that the Luxembourg Court had “not yet” considered the facts surrounding the November 12 Recapitalization Transaction “mischaracterizes the Luxembourg proceeding,” which “operate[d] pursuant to a statutory framework that provides the ability for creditors to challenge the amount, classification, and qualifications of its claim before the Luxembourg Court.” Id. at 40-41. 

Critically, when Chapter 15 recognition was granted, the Luxembourg Court had not yet approved a plan, and the plan confirmation process had not commenced. This is notable because it demonstrates that Chapter 15 recognition was a threshold procedural determination, not a substantive endorsement of the Recapitalization Transaction. Recognition did not rob the PIK AHG of an opportunity to participate in the Luxembourg Proceeding. 

Judge Glenn found that the Luxembourg Proceeding was collective in nature because “[c]reditors may appeal against a judgement approving [the] restructuring plan, the restructuring plan is reviewed by the Luxembourg Court and [the restructuring plan] must comply with Luxembourg law and the best interests of the creditors,” id. at 41.  Now that the Luxembourg plan has been approved, AGSA can seek to enforce the plan in the U.S., at which point the PIK AHG will have another opportunity to raise its objections at the enforcement stage. Id. at 2.

The Court also found that the Luxembourg Proceeding was a “foreign main proceeding” as the Debtor’s center of main interests was Luxembourg. Id. at 41.

The public policy exception does not apply

The Court likewise rejected PIK AHG’s public policy objection, holding that “[t]he public policy exception is an exacting standard, and the PIK AHG must demonstrate the existence of ‘exceptional circumstances concerning matters of fundamental importance for the United States.’” Id. at 42 (quoting In re Black Gold S.A.R.L., 635 B.R. 517, 528 (B.A.P. 9th Cir. 2022)). 

Judge Glenn found the fact that the Luxembourg Proceeding had not independently examined the Recapitalization Transaction did not, on its own, indicate that the Luxembourg Proceeding was contrary to U.S. public policy. In re ARD Finance, S.A., No. 25-12794 (MG), at 42. He contrasted the PIK AHG’s objection to cases in which courts have denied recognition under the public policy exception for various reasons and found that the facts here did not justify denying recognition on a public policy basis. Id. at 42-43 (citing In re Vitro, S.A.B. de C.V., 473 B.R. 117 (Bankr. N.D. Tex.), aff’d sub nom. In re Vitro S.A.B. de CV, 701 F.3d 1031 (5th Cir. 2012).

Here, Judge Glenn found that “creditors have robust protections in the Luxembourg Proceeding,” that “the PIK AHG has failed to identify problems with the Luxembourg Proceeding itself that warrant a denial under section 1506” and that it was “premature” to reach conclusions on what the Luxembourg Court would do when confronted with the PIK AHG’s objection because the Luxembourg Court had not yet been asked to approve a plan. In re ARD Finance, S.A., No. 25-12794 (MG), at 2, 42. The PIK AHG may appeal the plan’s approval in Luxembourg; if unsuccessful on appeal, it can object to enforcement of the plan in the Chapter 15 proceeding. See id. at 2, 41.

Why this case matters

In re ARD Finance is the first decision to consider whether a Luxembourg judicial reorganization proceeding qualifies for recognition as a “foreign main proceeding” under Chapter 15. Judge Glenn’s affirmative ruling offers attorneys their first concrete guidance on how U.S. courts are likely to approach cross-border restructurings governed by Luxembourg’s 2023 restructuring law.