In re Johnson, Case Nos. 04-74452, 04-74454, 2006 Bankr. LEXIS 2363 (Bankr. N.D. Ga. July 13, 2006) (Murphy).

Movant is a Canadian company that entered into a distributorship agreement with the debtor, a US corporation.  The agreement’s terms provided that it was governed by Canadian (Alberta) law.  A dispute arose, and movant filed suit against debtor in Canada. Soon thereafter, debtor filed a Chapter 7 petition and the Trustee of debtor filed an action against the Movant in the Superior Court of Cobb County, Georgia.  Movant then sought stay relief to proceed with its action in Canada.

The court denied the motion.  Although the Canadian case was filed first, it was stayed before an answer was filed. Moreover, debtor’s business and records are located in Georgia and the burden of making the Trustee litigate in Canada would possibly lead to the abandonment of significant claims of the estate.  Since Movant has filed a claim in the Bankruptcy case, it would not be deprived of a forum in which to protect its claim.

Update November 1, 2006 – The Federal Civil Practice Bulletin discusses a recent Second Circuit case with similar facts and holding.