US Objects to Liability Releases in Yuzhou Group Bankruptcy

A New York bankruptcy court should reject efforts by Chinese developer Yuzhou Group Holdings Co. to have the US recognize its Hong Kong-based restructuring proceedings and proposed litigation releases for nonbankrupt affiliates, the government said.

The US Bankruptcy Court for the Southern District of New York can’t provide Yuzhou with all of the relief it seeks in a pending bid for Chapter 15 recognition, the Justice Department’s bankruptcy monitoring division—the US Trustee—said in a filing Wednesday.

At the core of the government’s objection are provisions that would have the US court extinguish potential legal claims against third parties related to ...