Xinyuan Real Estate’s Hudson 888 case to remain open, court rules

By Sarah Lizee

Olympia, Wash., March 15 – Hudson 888 Owner LLC, a U.S. subsidiary of China’s Xinyuan Real Estate Co., Ltd., will continue on in its Chapter 11 case, as a dismissal motion from mortgage lender DOF II-Bloom Senior LLC and mezzanine lender DOF II-Bloom Mezz LLC has been denied by the U.S. Bankruptcy Court for the Southern District of New York.

The lenders had argued that the case should be dismissed or, alternatively, the automatic stay should be lifted to allow a dispute to proceed in the New York state court where debtors started litigation, and where the issues have been fully briefed.

The movants said the facts of the case favor dismissal, since the debtors have no employees and just one asset; there are very few unsecured creditors with small claims compared to the secured debt; the debtors’ property was subject to prepetition foreclosure and enforcement actions; and this is a two-party dispute.

“Lenders argue as though any action that interfered with their pursuit of state court remedies was a sign of ‘bad faith,’ but that simply is not the case,” judge Michael E. Wiles said in an opinion filed Friday.

“There is subjective reasonableness to the debtors’ contention that a reorganization may maximize the value of the relevant property and thereby maximize the recoveries of all parties in interest, including the lenders.”

Xinyuan is a Beijing-based real estate developer and property manager with properties primarily in China. New York-based Hudson 888 filed bankruptcy on Jan. 7 under Chapter 11 case number 24-10021.

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