Court Opinion

ID: 9929045
Source: CourtListenerOpinion
Date Created: 2024-02-01 18:00:52.281873+00
Date Added: 2024-06-11T10:05:37.580133
License: Public Domain

PRECEDENTIAL

  UNITED STATES COURT OF APPEALS
       FOR THE THIRD CIRCUIT
            _____________

                No. 22-3305
               _____________

  VERTIV, INC.; VERTIV CAPITAL, INC.;
          and GNARITIS, INC.,
                              Appellants

                      v.

WAYNE BURT PTE, LTD., and TGS MAHESH
          _____________

On Appeal from the United States District Court
         for the District of New Jersey
        (D.C. Civil No. 3:20-cv-00363)
 District Judge: Honorable Georgette Castner
                _____________

          Argued: September 6, 2023

   Before: CHAGARES, Chief Judge,
HARDIMAN and FREEMAN, Circuit Judges.

           (Filed: February 1, 2024)
Robert T. Szyba   [ARGUED]
Seyfarth Shaw
620 Eighth Avenue
New York, NY 10018
       Counsel for Appellants

Patrick T. Collins [ARGUED]
Skoloff & Wolfe
293 Eisenhower Parkway
Suite 390
Livingston, NJ 07039
       Counsel for Appellee

                         ___________

                OPINION OF THE COURT
                      ___________

FREEMAN, Circuit Judge.

        This case originated as a simple breach-of-contract
claim. But then the District Court learned that the defendant
company was in liquidation proceedings (analogous to United
States bankruptcy proceedings) in Singapore. The District
Court was asked to dismiss the action out of principles of
international comity, and it did so despite little recent guidance
from this Court. We now clarify the standard courts must apply
when deciding whether to abstain from adjudicating a case in
deference to what is essentially a pending foreign bankruptcy
proceeding. We will vacate the order of the District Court and
remand to give it the opportunity to apply this new guidance in
the first instance.

                                2
                                I

       Vertiv, Inc., Vertiv Capital, Inc., and Gnaritis, Inc.
(together “Vertiv”) are Delaware corporations headquartered
in New Jersey. Wayne Burt, PTE Ltd. (“Wayne Burt”) is a
Singaporean corporation with a primary place of business in
Singapore.

       In January 2020, Vertiv sued Wayne Burt and Cetex
Petrochemicals LTD (“Cetex”) in the United States District
Court for the District of New Jersey. Vertiv alleged that
Wayne Burt had defaulted on a loan and now owed Vertiv the
full value of the principal and interest due on the loan along
with the 46.82% of the total shares of Cetex stock pledged as
security. Vertiv sought damages and a declaratory judgment.
One of Wayne Burt’s directors promptly acknowledged the
debt and informed the District Court that judgment for Vertiv
was proper. So just two weeks after docketing the complaint,
the District Court signed a consent order granting judgment for
Vertiv. The judgment awarded Vertiv $29,290,000 in
damages, and it declared that Vertiv owned the shares of Cetex
stock that Wayne Burt had pledged as security for the loan. 1

       In September 2020, Vertiv filed a second suit against
Wayne Burt. It was identical to the first except that, in the
place of Cetex, it named Wayne Burt Petro Chemical Private
Limited as a defendant along with Wayne Burt. The parties

1
  Three weeks later, the District Court granted the parties’ joint
request to enter an amended judgment that included more
factual detail that the parties needed to enforce the judgment in
India.

                                3
again agreed to a consent judgment, and the District Court
entered judgment in Vertiv’s favor in November 2020.

       But these cases would not be resolved so easily. In
February 2021, Wayne Burt moved to vacate both judgments
under Federal Rule of Civil Procedure 60(b). It informed the
District Court that it was in liquidation proceedings in
Singapore—proceedings that began before Vertiv filed its suits
in the District Court. It contended that the officers who
purportedly consented to the judgments in the District Court
lacked the authority to act on Wayne Burt’s behalf because,
under Singapore law, only the Singaporean court-appointed
Liquidator could do so.

       In its Rule 60(b) motions (which were filed by the
Liquidator on the company’s behalf), Wayne Burt also asserted
that the loans underlying the judgments in the District Court
never existed. It attached evidence in support of that
contention. And it emphasized that it could not have
intervened earlier to oppose the judgments because the
Liquidator did not have notice of the proceedings.

       In July 2021, the District Court granted the Rule 60(b)
motions and vacated both judgments. It found that the
Liquidator “presented substantial and compelling evidence of
the fraudulent nature of these loans” and that the evidence, “at
a minimum, fits the definition of ‘misconduct’ under Rule
60(b)(3).” App. 582; Fed. R. Civ. P. 60(b)(3) (permitting
courts to grant a party relief from a final judgment based on
“fraud . . . , misrepresentation, or misconduct”). But it did not
grant relief under Rule 60(b)(3) because the motions may have
been untimely if filed on that basis. See Fed. R. Civ. P. 60(c)
(providing that a Rule 60(b)(3) motion “must be made within

                               4
a reasonable time” and “no more than a year after the entry of
the judgment” that it seeks to vacate). Instead, it vacated the
judgments as void because the Wayne Burt officers who
consented to the judgments were not authorized to represent
Wayne Burt—only the Liquidator was so authorized. See Fed.
R. Civ. P. 60(b)(4) (permitting courts to grant a party relief
from a final judgment that is void); Fed. R. Civ. P. 60(c)
(providing that a Rule 60(b)(4) motion “must be made within
a reasonable time”). Having vacated the judgments, the
District Court reopened both civil actions.

       The matters were then consolidated, and Vertiv filed the
operative amended complaint in September 2021. It brought
the same claims as before against Wayne Burt. It also brought
a breach-of-contract claim against one of Wayne Burt’s
directors, TGS Mahesh, alleging that he had personally
guaranteed the loans.

       In November 2021, Wayne Burt (through the
Liquidator) moved to dismiss Vertiv’s claims under Federal
Rules of Civil Procedure 12(b)(2) and 12(b)(6). 2 It asked the
District Court to dismiss the amended complaint either (1) on
international comity grounds in deference to the ongoing
liquidation proceedings in Singapore, or (2) because the court
lacked personal jurisdiction over the company. Vertiv opposed
the motion, arguing that extending comity to the Singaporean
proceedings was inappropriate under our precedent. It also

2
  Mahesh answered Vertiv’s complaint, and he filed a cross-
claim against Wayne Burt seeking indemnification to cover his
personal guarantee of the loans. Wayne Burt moved to dismiss
Vertiv’s claims and Mahesh’s cross-claim.

                              5
argued that the loan documents’ forum selection clauses gave
the District Court personal jurisdiction over Wayne Burt.

      The District Court resolved the motion on international
comity grounds, without addressing personal jurisdiction.
Because the parties disagreed about the appropriate test to
apply when addressing international comity, the District Court
addressed both of the tests the parties suggested. It held that
extending comity to the Singaporean court proceedings was
appropriate under either test.

        First, the District Court applied the four-factor test
articulated in Austar International, Ltd. v. Austarpharma LLC,
425 F. Supp. 3d 336 (D.N.J. 2019). It concluded that all four
factors supported extending comity. Specifically, it concluded
that (1) Singapore has jurisdiction over Wayne Burt’s
liquidation; (2) the Singapore liquidation and this action are
parallel, and Vertiv can make claims as Wayne Burt’s creditors
in the Singapore liquidation proceedings; (3) extraordinary
circumstances necessitate dismissal of this action; and
(4) United States policy supports dismissal of this action.

        Next, the District Court addressed our test from
Philadelphia Gear Corp. v. Philadelphia Gear de Mexico,
S.A., 44 F.3d 187 (3d Cir. 1994). It noted our holding in
Philadelphia Gear that “a party seeking a stay of a judicial
proceeding in this country based on a foreign bankruptcy
proceeding must demonstrate the following: (1) the foreign
bankruptcy court shares our policy of equal distribution of
assets; and (2) the foreign law mandates the issuance or at least
authorizes the request for the stay.” Id. at 193. It found that
those two factors were satisfied, so it concluded that extending
comity was appropriate. It granted Wayne Burt’s motions to

                               6
dismiss the amended complaint, dismissed the amended
complaint with prejudice, and ordered the Clerk’s Office to
close the case. Vertiv timely appealed. 3

                               II

      The District Court had diversity jurisdiction under 28
U.S.C. § 1332, and we have subject-matter jurisdiction under
28 U.S.C. § 1291.

        We review a district court’s “extension or denial of
comity” to a foreign proceeding for abuse of discretion, Phila.
Gear, 44 F.3d at 191, and we review findings of fact underlying
the decision for clear error, Remington Rand Corp. Del. v. Bus.
Sys. Inc., 830 F.2d 1260, 1266 (3d Cir. 1987). A district court
abuses its discretion if its ruling is based on an erroneous view
of the law. Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.,
572 U.S. 559, 563 n.2 (2014).

                               III

                               A

       Vertiv appeals the District Court’s decision to extend
comity to Wayne Burt’s insolvency proceeding in Singapore.
“Comity is a recognition which one nation extends within its
own territory to the legislative, executive, or judicial acts of
another.” Somportex Ltd. v. Phila. Chewing Gum Corp., 453
F.2d 435, 440 (3d Cir. 1971). It is a practice intended to give
“due regard both to international duty and convenience, and to
3
 The District Court’s order dismissed Vertiv’s complaint in its
entirety. It also dismissed Mahesh’s cross-claim against
Wayne Burt. Mahesh did not appeal.

                               7
the rights of [a nation’s] citizens, or of other persons who are
under the protection of its laws.” Hilton v. Guyot, 159 U.S.
113, 164 (1895).

        This case involves adjudicatory comity, which is a
discretionary act of deference to a foreign court. Mujica v.
AirScan Inc., 771 F.3d 580, 599 (9th Cir. 2014) (discussing
“adjudicatory comity” or “comity among courts”). 4 Under this
doctrine, a court asks if it should “decline to exercise
jurisdiction over matters more appropriately adjudged
elsewhere . . . .” Id. (quoting Hartford Fire Ins. Co. v.
California, 509 U.S. 764, 817 (1993) (Scalia, J., dissenting in
part)).

       Adjudicatory comity arises only when a matter before a
United States court is pending in or has resulted in a final
judgment from a foreign court—that is, when there is or was a
“parallel” foreign proceeding. 5 See Spencer v. Kugler, 454

4
  Adjudicatory comity is distinct from prescriptive comity,
which refers to “the respect sovereign nations afford each other
by limiting the reach of their laws.” See Hartford Fire, 509
U.S. at 817; Mujica, 771 F.3d at 598–99 (discussing the two
distinct international comity doctrines).
5
 Adjudicatory comity principles arise in at least three contexts.
See Diorinou v. Mezitis, 237 F.3d 133, 139–40 (2d Cir. 2001).
Federal courts have considered whether: (1) to abstain from
exercising jurisdiction in deference to a pending foreign
proceeding, see, e.g., Phila. Gear, 44 F.3d 187; (2) to enforce
a judgment rendered by a foreign tribunal, see, e.g., Somportex,
453 F.2d 435; and (3) to preclude a particular claim or issue

                               8
F.2d 839, 847 n.17 (3d Cir. 1972) (“[O]ne court should defer
action on causes properly within its jurisdiction until the courts
of another sovereignty with concurrent powers, and already
cognizant of the litigation, have had an opportunity to pass
upon the matter.”); Gross v. German Found. Indus. Initiative,
456 F.3d 363, 393 (3d Cir. 2006) (abstention “based on
principles of international comity” may be due to a “foreign
judgment or ongoing proceeding in a foreign tribunal”). When
that prerequisite is satisfied, the United States court then
reviews the procedures and the system of laws in the foreign
court and assesses whether the foreign proceedings are likely
to (or likely did) result in the impartial administration of
justice. Hilton, 159 U.S. at 202–03.

      The Supreme Court has held that foreign bankruptcy
proceedings are particularly deserving of adjudicatory comity. 6
In Canada Southern Railway Company v. Gebhard, the Court

previously adjudicated by a foreign tribunal, see, e.g.,
Diorinou, 237 F.3d 133. The test we announce today applies
in the first context.

6
  We use the term “bankruptcy” to encompass the full array of
insolvency proceedings, including (but not limited to)
reorganization and liquidation. We recognize that many
foreign nations do not use the term “bankruptcy.” See
American Law Institute, Global Principles for Cooperation in
Int’l Insolvency Cases § 1 intro. n.2 (2012) (“[I]n worldwide
English-language usage ‘insolvency’ is the more common term
for such proceedings where a business debtor is involved,
whilst in the North American region ‘bankruptcy’ is at least as
often used for business proceedings as well as those involving
consumers.”).

                                9
reversed judgment for American creditors in a domestic suit
because its resolution interfered with a railway corporation’s
reorganization proceedings in Canada. 109 U.S. 527, 532,
537–40 (1883). It observed that the railway corporation had
been formed in Canada, had a principal place of business in
Canada, and derived its powers to contract from the Canadian
government. Id. at 538. And when the corporation could not
meet its financial obligations, it turned to Canadian courts to
pursue a reorganization in the interest of its creditors and other
parties in interest. Id. at 538–39. Given all this, the Supreme
Court held that the foreign reorganization proceedings were “in
entire harmony with the spirit of bankrupt[cy] laws, the
binding force of which, upon those who are subject to the
jurisdiction, is recognized by all civilized nations.” Id. at 539.
And it explained why American parties should be bound by the
Canadian bankruptcy proceedings: “[u]nless all parties in
interest, wherever they reside, can be bound by the
arrangement which it is sought to have legalized, the scheme
may fail.” Id. Thus, it concluded that the actions in the United
States courts “cannot be maintained.” Id. Instead, “the true
spirit of international comity requires that [bankruptcy]
schemes of this character, legalized at home, should be
recognized in other countries.” Id.; see also Stonington
Partners, Inc. v. Lernout & Hauspie Speech Products N.V., 310
F.3d 118, 126 (3d Cir. 2002), as amended (Nov. 12, 2002)
(“The principles of comity are particularly appropriately
applied in the bankruptcy context because of the challenges
posed by transnational insolvencies . . . .”).

       Two of our decisions have addressed the relevant
inquiries for courts deciding whether to abstain on
international comity grounds in deference to a pending foreign
bankruptcy proceeding. In our 1987 Remington Rand opinion,

                               10
we observed that comity is generally supported where the
foreign country’s bankruptcy laws share the “fundamental
principle” of the United States bankruptcy laws: “that assets be
distributed equally among creditors of similar standing.” 830
F.2d at 1271. And we noted the corollary proposition that
district courts must “guard against forcing American creditors
to participate in foreign proceedings in which their claims will
be treated in some manner inimical to this country’s policy of
equality.” Id. (cleaned up); see also id. at 1266 (holding that
the Bankruptcy and District Courts did not abuse their
discretion by denying comity to a foreign bankruptcy
proceeding that did not afford a United States creditor due
process or the opportunity to be heard); Hilton, 159 U.S. at
202–03 (identifying relevant indicia of due process for the
comity inquiry, including the competent jurisdiction of the
foreign court and the impartial, regular adjudication
procedures conducted without prejudice or fraud). We further
emphasized that section 304 of the United States Bankruptcy
Code “expresses Congressional recognition of an American
policy favoring comity for foreign bankruptcy proceedings.”
830 F.2d at 1271; 11 U.S.C. § 304 (2000) (authorizing courts
to stay United States actions against companies or property
subject to a foreign insolvency proceeding) (repealed by Pub.
L. 109–8. Title VIII, § 802(d)(3) (2005)). Section 304 has
since been repealed and replaced by Chapter 15 of the United
States Bankruptcy Code. See In re ABC Learning Centres Ltd.,
728 F.3d 301, 306 (3d Cir. 2013). But Chapter 15, like its
predecessor, favors extending comity to foreign insolvency
proceedings. 11 U.S.C. §§ 1509, 1515–1524 (directing United
States bankruptcy courts to recognize and grant comity to
certain foreign proceedings). Once a foreign proceeding is
recognized under Chapter 15, the automatic stay provided by
11 U.S.C. § 362 of the Bankruptcy Code applies to the foreign

                              11
debtor and its property “within the territorial jurisdiction of the
United States.” 11 U.S.C. § 1520(a)(1).

       We gave more specific guidance about the comity
inquiry in our 1994 Philadelphia Gear opinion. 44 F.3d 187.
Drawing on Remington Rand, we held that the party seeking a
stay of a proceeding in the United States based on comity to a
pending foreign bankruptcy proceeding must make a prima
facie showing that (1) “the foreign bankruptcy law shares our
policy of equal distribution of assets,” and (2) “the foreign law
mandates the issuance or at least authorizes the request for the
stay.” 44 F.3d at 193. If the party urging comity makes this
prima facie showing, the court must then ask additional
questions to determine “whether according comity to the
[foreign] proceedings would be prejudicial to the interest of the
United States.” Id. at 194 (quotation marks omitted). We
remanded to the District Court so it could address four specific
questions: whether (1) the foreign bankruptcy proceedings are
in a duly authorized tribunal, (2) the foreign bankruptcy
proceedings provide for equal treatment of creditors, (3) the
foreign court would treat the United States creditor in some
manner inimical to this country’s policy of equality, and (4) the
party opposing comity would be prejudiced by a stay of the
United States proceeding. Id. We also instructed the court to
address “any other issues it finds relevant” to the comity
inquiry. Id.

                                B

       Read together, Remington Rand and Philadelphia Gear
lay out the broad inquiries a United States court must make
when deciding whether to abstain from exercising its
jurisdiction in deference to a pending foreign bankruptcy

                                12
proceeding. It has been nearly three decades since we
addressed this topic, and updated guidance is warranted. See
Hembach v. Quikpak Corp., No. CIV. A. 97-3900, 1998 WL
54737, at *3 (E.D. Pa. Jan. 8, 1998) (observing that
Philadelphia Gear’s four mandatory considerations are
“somewhat redundant[]” to the requirements for a prima facie
showing). So today we provide additional direction to courts
considering whether to extend adjudicatory comity to a
pending foreign bankruptcy proceeding.

       As a threshold matter, United States courts only
consider extending adjudicatory comity to a pending
proceeding that is “parallel.” Spencer, 454 F.2d at 847 & n.17;
Gross, 456 F.3d at 393 (discussing the prerequisites for
international comity); Phila. Gear, 44 F.3d at 193–94
(affirming the extension of adjudicatory comity to a parallel
proceeding in a Mexican court). So we must clarify when a
foreign insolvency proceeding is “parallel” to a civil action in
a United States court.

       Although adjudicatory comity is a type of abstention,
we cannot adopt the definition of “parallel” that we use for
purposes of Colorado River abstention. See Colo. River Water
Conservation Dist. v. United States, 424 U.S. 800, 814–17
(1976) (discussing circumstances that may permit a federal
court to relinquish jurisdiction in deference to a state court
proceeding). In the Colorado River abstention context, “cases
are parallel when they involve the same parties and claims.”
Kelly v. Maxum Specialty Ins. Grp., 868 F.3d 274, 285 (3d Cir.
2017) (citation omitted). But that definition of “parallel” is
inapposite when addressing foreign bankruptcy matters that
may bear little resemblance to a standard civil action in the
United States. Cf. American Law Institute, Global Principles

                              13
for Cooperation in Int’l Insolvency Cases, § 2 intro. (2012)
(recognizing the “widely differing legal traditions and
practices” of “the nations of the world with respect to
insolvency law and policy”).

        So we draw on the inquiry that United States bankruptcy
courts make to decide whether a civil action is “related to” a
United States bankruptcy proceeding. This inquiry determines
whether a bankruptcy court has “non-core” subject matter
jurisdiction over a matter—which “is the broadest of the
potential paths to bankruptcy jurisdiction.” In re Resorts Int’l,
Inc., 372 F.3d 154, 163 (3d Cir. 2004). “An action . . . is
‘related to’ a bankruptcy proceeding if the outcome could alter
the debtor’s rights, liabilities, options, or freedom of action
(either positively or negatively) and [if the outcome] in any
way impacts upon the handling and administration of the
bankrupt estate.” Nuveen Mun. Tr. ex rel. Nuveen High Yield
Mun. Bond Fund v. WithumSmith Brown, P.C., 692 F.3d 283,
294 (3d Cir. 2012) (cleaned up). When such a related action
arises, the Bankruptcy Court “submit[s] proposed findings of
fact and conclusions of law to the district court” to resolve the
dispute because of its effect on the debtor or the estate. 7 28
U.S.C. § 157(c)(1).

7
  Issues raised in these non-core proceedings are “related to”
the bankruptcy proceedings when they either “invoke[] a
substantive right provided by title 11” or “by [their] nature
could arise only in the context of a bankruptcy case.” In re
Resorts Int’l, 372 F.3d at 163 (quotation marks omitted); see
generally In re Essar Steel Minn. LLC, 47 F.4th 193, 197–98
(3d Cir. 2022).

                               14
       Congress established “related to” jurisdiction “to grant
bankruptcy courts comprehensive jurisdiction so that they
could deal efficiently and expeditiously with matters connected
with the bankruptcy estate.” In re Resorts Int’l, 372 F.3d at
163 (quotation marks omitted). As the outer boundary of
bankruptcy jurisdiction, “related to” proceedings reflect the
United States’ view of the “broader universe of all
proceedings” that are sufficiently connected to the bankruptcy
proceeding such that they would benefit from a bankruptcy
judge’s expertise. In re Exide Techs., 544 F.3d 196, 205 (3d
Cir. 2008). We use this broad definition for a “related to”
proceeding here because of the wide variation in how foreign
bankruptcy proceedings and their associated legal systems
operate. It intends to capture relevant domestic proceedings
that may affect the foreign debtor’s estate regardless of how
the foreign bankruptcy proceeding is structured.

       So we conclude that a civil action in a United States
court is “parallel” to a foreign bankruptcy proceeding when:
(1) the foreign bankruptcy proceeding is ongoing in a duly
authorized tribunal while the civil action is pending before the
United States court, Phila. Gear, 44 F.3d at 193; and (2) the
outcome of the United States civil action may affect the
debtor’s estate. 8 The second factor is flexible and must be

8
  The definition we adopt here is consistent with how the
Second Circuit addresses the question of parallel proceedings
in the international bankruptcy context. See JP Morgan Chase
Bank v. Altos Hornos de Mexico, S.A. de C.V., 412 F.3d 418,
427–28 (2d Cir. 2005) (concluding that a foreign bankruptcy
proceeding is parallel to a domestic action when the claim
before the United States court involves the debt at issue in the
foreign proceedings).

                              15
context specific, but our precedent analyzing whether a non-
core proceeding is related to a bankruptcy proceeding may
provide useful guidance.

        Once the United States court is satisfied that the foreign
bankruptcy proceeding is parallel, the party seeking the
extension of comity must make its prima facie case. As we
held in Philadelphia Gear, a party does so by showing that
(1) “the foreign bankruptcy law shares our policy of equal
distribution of assets,” and (2) “the foreign law mandates the
issuance or at least authorizes the request for the stay.” 44 F.3d
at 193.

       Upon finding a prima facie case for comity, the United
States court must make additional inquiries about the foreign
bankruptcy proceeding’s fairness to the parties and
compatibility with United States public policy preferences.
Remington, 830 F.2d at 1266, 1271. In Philadelphia Gear, we
instructed the District Court to address four questions, some of
which overlapped with the requirements for a prima facie case.
44 F.3d at 194. So we now elaborate upon the questions courts
must address after a party has made a prima facie case for
comity.

       Philadelphia Gear instructed United States courts to
make four inquiries: whether (1) the foreign bankruptcy
proceeding is taking place in a duly authorized tribunal, (2) the
foreign bankruptcy court provides for equal treatment of
creditors, (3) extending comity would be “in some manner
inimical to this country’s policy of equality,” and (4) the party
opposing comity would be prejudiced. Id. The first of these
inquiries requires no elaboration and is necessarily satisfied if
the foreign proceeding is parallel to the domestic action. The

                               16
second inquiry, which addresses the equal treatment of
creditors, relates to but differs from the prima facie case
requirement that the foreign bankruptcy tribunal have a policy
for equal distribution of assets. At the prima facie stage, a
court asks whether the foreign bankruptcy tribunal provides for
“equality of distribution among creditors of equal priority.” 7
Collier on Bankruptcy ¶ 1100.01 (16th ed. 2023). But for the
subsequent inquiry, the United States court assesses whether
“any plan of reorganization is fair and equitable as between
classes of creditors that hold claims of differing priority or
secured status.” Id.

       The third inquiry—ensuring that the foreign
proceedings’ actions are consistent with the United States’
policy of equality—warrants a deeper discussion. It functions
as a catch-all consideration of whether “forcing American
creditors” to participate in the foreign bankruptcy proceedings
would be unfair because those creditors receive substantially
fewer protections to ensure equal treatment than they would in
a domestic proceeding. Remington, 830 F.2d at 1271 (quoting
Banque De Financement, S.A. v. First Nat’l Bank of Boston,
568 F.2d 911, 921 (2d Cir. 1977)). 9 To inform this inquiry, we

9
  In Banque De Financement, the Second Circuit considered
whether the bankruptcy court erred in dismissing a bankruptcy
petition under a prior provision of the Bankruptcy Act
permitting it to suspend or dismiss a bankruptcy action after
giving “regard to the rights and convenience of local
creditors.” 568 F.2d at 921 (considering the application of
former Bankruptcy Act § 2a(22) and Bankruptcy Rule 119). It
noted that the provision did not require comparing the general
rights (including property rights) a creditor would have under

                              17
turn for guidance to Second Circuit authority. That court has
articulated “indicia of procedural fairness” in foreign
bankruptcy proceedings that demonstrate principles of equality
are present and enforced:

      (1) whether creditors of the same class are
      treated equally in the distribution of assets;
      (2) whether the liquidators are considered
      fiduciaries and are held accountable to the court;
      (3) whether creditors have the right to submit
      claims which, if denied, can be submitted to a
      bankruptcy court for adjudication; (4) whether
      the liquidators are required to give notice to the
      debtors[’] potential claimants; (5) whether there
      are provisions for creditors[’] meetings;
      (6) whether a foreign country[’]s insolvency
      laws favor its own citizens; (7) whether all assets
      are marshalled before one body for centralized
      distribution; and (8) whether there are provisions
      for an automatic stay and for the lifting of such
      stays to facilitate the centralization of claims.

Finanz AG Zurich v. Banco Economico S.A., 192 F.3d 240, 249
(2d Cir. 1999). While certain factors are duplicative of
considerations already discussed, this non-exhaustive list can

foreign law with United States law and dismissing the United
States petition if the foreign law was more favorable to the
American creditor. Id. Rather, the sole consideration was
whether the equality principles underlying United States
bankruptcy proceedings were sufficiently reflected in the
foreign proceedings such that American creditors would not be
disadvantaged. Id.

                              18
serve as a guide for United States courts as they assess the full
scope of equality concerns related to foreign bankruptcy
proceedings. But we emphasize that foreign bankruptcy
proceedings need not function identically to similar
proceedings in this country in order to be consistent with the
United States’ policy of equality. See Allstate Life Ins. Co. v.
Linter Grp. Ltd., 994 F.2d 996, 999 (2d Cir. 1993).

        And United States courts will not address a foreign
proceeding’s equality factors in a vacuum—those factors are
relevant because of their effect on the parties in the United
States civil action. See Finanz, 192 F.3d at 249 (“[A]lthough
the Brazilian proceeding apparently does not require
individualized notice, Finanz received actual notice of the
Brazilian proceeding from the general manager of the New
York Branch and subsequently filed a timely claim.
Accordingly, the District Court correctly concluded that there
was no due process violation.”). Thus, they bear on (but do not
limit the scope of) the fourth Philadelphia Gear factor:
prejudice to the party opposing the extension of comity to the
foreign bankruptcy proceeding. Specifically, at the fourth step,
the same factors used to evaluate whether the foreign
jurisdiction’s pending proceedings are inimical to this
country’s policy of equality under factor three are applied to
the specific party opposing comity to evaluate whether such
protections have been available to that party in practice (as
applicable). The United States court must assess whether the
pending foreign bankruptcy proceedings provide due process
protections for the party opposing the extension of comity.
Remington, 830 F.2d at 1266, 1271. For instance, a United
States court is well within its discretion to deny the extension
of comity to foreign proceedings that deny “notice and

                               19
opportunity to be heard” to a party opposing comity. See id. at
1266.

       Finally, we reiterate that this non-exhaustive list of
factors is intended to inform one overarching question:
whether extending comity in the given circumstances “would
be prejudicial to the interest[s]” of the United States. Phila.
Gear, 44 F.3d at 191, 194. As discussed above, Chapter 15 of
the United States Bankruptcy Code provides the United States’
policy positions on foreign bankruptcy proceedings and
endorses both unitary bankruptcy proceedings and deference to
ongoing foreign proceedings. ABC Learning Centres, 728
F.3d at 304–06. Absent a change to the United States
Bankruptcy Code or a specific policy position regarding the
foreign jurisdiction where the bankruptcy proceedings are
taking place, Chapter 15 will generally favor deference to
parallel bankruptcy proceedings. But comity is a fact-
dependent inquiry, so a United States court may consider “any
other issues it finds relevant” to the interests of the United
States in relation to a given foreign proceeding. Phila. Gear.,
44 F.3d at 194.

       In future cases, the refreshed Philadelphia Gear test that
we articulate today shall govern adjudicatory comity with
regard to pending foreign bankruptcy proceedings. The test
used by a district court in Austar is inapplicable here. 10

10
  Austar draws on precedent from sister circuits that apply the
“extraordinary circumstances” factors from Colorado River to
international proceedings. Compare Austar Int’l Ltd, 425 F.
Supp. 3d at 363, with Answers in Genesis of Ky., Inc. v.
Creation Ministries Int’l, Ltd., 556 F.3d 459, 467 (6th Cir.

                               20
                                C

        When a United States court decides to extend comity to
a foreign bankruptcy proceeding, it ordinarily should stay the
civil action or dismiss it without prejudice. Telcordia Tech Inc.
v. Telkom SA Ltd., 458 F.3d 172, 181 (3d Cir. 2006)
(“[D]ismissal without prejudice[] is consistent with this
Court’s notions of comity in the international arena . . . .”).
Both of these measured actions protect the substantial rights of
the parties. They also leave open an avenue for a United States
creditor to resume its civil action if changed circumstances
counsel against the continued extension of comity. Cf. Royal
& Sun All. Ins. Co. of Can. v. Century Int’l Arms, Inc., 466 F.3d
88, 96 (2d Cir. 2006) (“As a lesser intrusion on the principle of
obligatory jurisdiction, which might permit the district court a
window to determine whether the foreign action will in fact
offer an efficient vehicle for fairly resolving all the rights of
the parties, . . . a stay is an alternative that normally should be
considered before a comity-based dismissal is entertained.”).

2009); Royal & Sun All. Ins. Co. of Can. v. Century Int’l Arms,
Inc., 466 F.3d 88, 93 (2d Cir. 2006); Al-Abood ex rel. Al-Abood
v. El-Shamari, 217 F.3d 225, 232 (4th Cir. 2000); Ingersoll
Milling Mach. Co., 833 F.2d 680, 684 (7th Cir. 1987). But
Colorado River’s admonition that federal courts have a
“virtually unflagging obligation . . . to exercise the jurisdiction
given them” when assessing whether to abstain in deference to
parallel state proceedings, 424 U.S. at 817, is inapplicable in
the foreign bankruptcy context given Canada Southern
Railway Company’s guidance that fair bankruptcy proceedings
should be recognized in foreign countries just as they are in the
United States, Can. S. Ry. Co., 109 U.S. at 539.

                                21
                               D

        Turning to Vertiv’s appeal, we begin with the threshold
question of whether Vertiv’s case against Wayne Burt is
“parallel” to the latter’s insolvency proceedings in Singapore.
Although the District Court has not had an opportunity to
address parallelism using the definition provided above, we
need not remand for a decision on that issue because
parallelism is established by the undisputed facts. The parties
agree that Wayne Burt is subject to ongoing liquidation
proceedings in Singapore, and no party has questioned
Singapore’s jurisdiction over the liquidation proceedings.
Therefore, it is plain that Wayne Burt’s foreign bankruptcy
proceeding is ongoing in a duly authorized tribunal while
Vertiv’s civil action against Wayne Burt is pending in the
District Court. It is also plain that Wayne Burt, as a defendant
in the civil action, is a necessary party to the action in the
District Court. And the outcome of this action in which Vertiv
seeks, among other things, $29,290,000 in damages from
Wayne Burt would plainly affect Wayne Burt’s estate in the
Singapore liquidation. So the matters are parallel for purposes
of this comity inquiry.

        Moving on to the prima facie showing required under
Philadelphia Gear, we discern no error with the District
Court’s findings: Singapore shares the United States’ policy of
equal distribution of assets among similarly situated creditors,
and Singapore law authorizes a stay or dismissal of Vertiv’s
civil action against Wayne Burt. Wayne Burt has presented no
evidence to counter the District Court’s finding about equal

                              22
distribution of assets. 11 And it is undisputed that Singapore
law prohibits any action or proceeding against Wayne Burt
without leave of the Singapore court. See App. 107 (citing
§ 262(3) of Singapore’s Companies Act, Chap. 50 (“When a
winding up order has been made or a provisional liquidator has
been appointed, no action or proceeding shall be proceeded
with or commenced against the company except (a) by leave
of the Court; and (b) in accordance with such terms as the
Court imposes.”)). Because no such leave was granted to
Vertiv, dismissal of Vertiv’s action is authorized by Singapore
law. 12

11
   We disagree with Vertiv’s contention that it was unable to
rebut Wayne Burt’s assertions about equal distribution of
assets under Singapore law. Wayne Burt first invoked the
relevant provisions of Singapore law when its Liquidator
sought to dismiss the September and November 2020 consent
judgments as void, and it referenced these same provisions in
its reply to Vertiv’s response to its motion to dismiss. Despite
having ample opportunity to do so, Vertiv never presented the
District Court with evidence disputing that Singapore law
supports equal distribution of debtor assets during liquidation
proceedings.
12
    In the District Court and on appeal, Vertiv attempts to
undermine this finding by presenting evidence of the truism
that Singapore law does not have extraterritorial effect. These
arguments are meritless. A foreign jurisdiction need not have
laws that apply beyond its borders for us to extend comity to
its bankruptcy proceedings. “That the laws of a country have
no extraterritorial force is an axiom of international
jurisprudence . . . .” Can. S. Ry. Co., 109 U.S. at 536.

                              23
        We will remand to the District Court so it can apply the
remainder of the applicable test in the first instance. Although
the District Court addressed part of the Philadelphia Gear test,
it did not complete the task; it stopped after finding that Wayne
Burt made a prima facie case for comity to a foreign
bankruptcy proceeding. So we will vacate the District Court’s
order dismissing Vertiv’s action against Wayne Burt and
remand for further proceedings.

        We note that Wayne Burt’s motion to dismiss raised
international comity and personal jurisdiction as alternative
grounds upon which to dismiss the complaint. Although we
express no opinion on the merits of the personal jurisdiction
arguments, we note that the District Court is not constrained on
remand to resolve the motion on international comity grounds.
If it chooses to do so, however, it will be guided by the refined
bankruptcy-specific comity standard we articulate today.

                        *      *       *

       For the above reasons, we will vacate the District
Court’s order granting Wayne Burt’s motion to dismiss
Vertiv’s complaint and remand for further proceedings.

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