LDK Solar Debt Plans Get U.S. Bankruptcy Court Approval

LDK Solar Co., the Chinese solar-cell maker that defaulted on its bonds this year, won U.S. court approval of its foreign restructuring, capping an international reorganization.

The restructuring “is believed to be the first judicially approved, multi-jurisdictional debt restructuring of its kind for a China-based corporate group,” Jessica Boelter, a lawyer for LDK, said in an e-mailed statement.

Xinyu, China-based LDK filed for Chapter 15 protection last month, listing about $1.13 billion in debt and $510 million in assets as of May 31. Chapter 15 is the section of the bankruptcy code used by foreign companies restructuring abroad to fend off creditors and distribute payments in the U.S.

LDK’s international turnaround “provides a road map for future cross-border debt restructurings involving companies with complex debt structures governed by the laws of Hong Kong,” said Boelter, of Sidley Austin LLP.

The solar-cell maker, which also sought court protection in Hong Kong and the Cayman Islands, said it will carry out the pre-negotiated turnaround plan it announced in September.

‘Main Proceeding’

U.S. Bankruptcy Judge Peter J. Walsh in Wilmington, Delaware, recognized the LDK’s foreign restructuring as the “main proceeding,” allowing the company to carry out its plan in the U.S, according to court documents filed Nov. 21.

Affiliates in the U.S., including LDK Solar Systems Inc., sought protection under Chapter 11. The Chapter 11 plan was also confirmed by the court.

“Now with more than $700 million in our offshore claims judicially approved for restructuring, we can focus our attention on rebuilding LDK Solar’s position in the marketplace,” Chief Executive Officer Xingxue Tong said in a statement today.

The company saw its financial performance decline since 2011 in part due to overcapacity in the solar-cell market, Tammy Fu, the provisional liquidator in Grand Cayman, said in a court filing.

LDK is at least the fourth Chinese solar company in little more than a year that has sought bankruptcy or been forced to restructure its debt.

The case is In re LDK Solar Co., 14-12387, U.S. Bankruptcy Court, District of Delaware (Wilmington).

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