## Facts

- Finanz Aktiengesellschaft Zurich, a Swiss forfaiting company, held promissory notes arising from an export-financing (forfaiting) transaction.
- The notes were guaranteed by Banco Economico S.A.’s Cayman Islands branch, and payment was to be made through the bank’s New York branch.
- Brazil’s Central Bank placed Banco Economico into an extrajudicial liquidation proceeding in Brazil.
- The Office of the Comptroller of the Currency entered a consent order addressing the orderly liquidation and payment of liabilities of the bank’s New York branch.
- Finanz sought payment in New York; payment was refused.
- Finanz sued; the bank sought dismissal based on international comity in favor of the Brazilian liquidation proceeding.

## Issues

1. Whether the district court abused its discretion by dismissing the New York action in deference to Banco Economico’s Brazilian extrajudicial liquidation under international comity.
2. Whether comity was improper because the Brazilian liquidation conflicted with significant U.S. public policy interests, including enforcement of New York–payable obligations and the OCC’s branch liquidation regime.
3. Whether the Brazilian liquidation procedures satisfied due process and fundamental fairness for foreign creditors.

## Decision

- The Second Circuit affirmed the dismissal.
- The court held the district court acted within its discretion in extending comity to the Brazilian extrajudicial liquidation.
- The court found no sufficient conflict with U.S. public policy to bar comity.
- The court concluded the Brazilian proceeding provided procedures compatible with basic due process and fundamental fairness.

## Legal Principles

- U.S. courts may extend international comity to foreign insolvency or liquidation proceedings when the foreign process is compatible with due process, treats creditors in a fundamentally fair and non-discriminatory manner, and is not contrary to U.S. public policy.
- Comity in the insolvency context favors centralized administration of claims in a single forum to prevent inconsistent outcomes and duplicative distributions.
- A foreign liquidation need not mirror U.S. bankruptcy procedure; it must provide notice, an opportunity to present claims, and an orderly distribution framework.
- A district court’s decision to grant comity is reviewed for abuse of discretion.
- A U.S. regulatory order governing a domestic branch’s liquidation does not necessarily require U.S. adjudication of all claims against the foreign bank entity where a comprehensive foreign liquidation is underway.

## Conclusion

The Second Circuit upheld dismissal of the creditor’s New York suit, holding that deferring to Brazil’s regulator-supervised extrajudicial liquidation was a permissible exercise of comity because the proceeding was fundamentally fair and did not contravene significant U.S. policy.


Finanz Aktiengesellschaft Zurich v. Banco Economico Sociedade Anonima, 192 F.3d 240 (2d Cir. 1999)