Plaintiff, Alberto Bertisch, by motion for summary judgment in lieu of a complaint, filed on September 26, 2003 (the complaint), seeks to recover $335,000 from defendant, Sarid Drory, for defendant's alleged breach of a loan contract. Defendant cross-moves to dismiss the complaint.

This action concerns a loan agreement between plaintiff and defendant, dated November 27, 2001, which was executed in Hebrew and subsequently translated into English. Under the loan agreement, plaintiff, an American citizen who claims to do business with defendant in the United States and in Israel, borrowed $352,000 from Bank Leumi of Israel, Ltd. and loaned the funds to defendant, an Israeli citizen. On January 29, 2002, the day by which the loan was to be repaid, a balance of $335,000 remained. On February 1, 2002, the parties entered into an amendment to the agreement (together, with the loan agreement, hereinafter referred to as the Agreement), which was also executed in Hebrew and subsequently translated into English. Under the Agreement, defendant agreed to make payments to plaintiff beginning February 20, 2002 through November 1, 2002 for the remaining balance of $335,000, plus an additional $50,000 in damages. Subsequently, defendant made $50,000 in payments to plaintiff and allegedly defaulted on the remaining $335,000.

On April 29, 2002 an involuntary bankruptcy proceeding was filed against defendant in the Israeli District Court (the Israeli Bankruptcy Proceeding), to which defendant filed objections. The Israeli Bankruptcy Proceeding was commenced by one of defendant's creditors, Avaraham Weisel, with whom defendant established a company titled Millennium 2001 S.D.A.V. Ltd. to carry out a construction project. Weisel claims that defendant owes him several million dollars for his alleged failure to meet certain obligations.

On July 6, 2003, prior to the commencement of this action, plaintiff filed a claim in the Israeli Bankruptcy Proceeding by filing a lawsuit asserting that defendant is indebted to him for $400,000, based on a loan plaintiff gave to defendant to purchase a piece of property for their Israeli company, Millennium 2000 S.D.A.B. (1999). The loan is the subject of two contracts between the parties, dated April 6, 2000 and November 29, 2001, respectively.

On November 18, 2003, a Receiving Order was issued by the Israeli District Court, finding the existence of an act of bankruptcy committed by defendant and requiring defendant to [*2]submit a report to the Official Receiver detailing his assets, expenses, and debts. The Receiving Order also requires defendant to submit monthly reports on his income and expenses to the Official Receiver. The Receiving Order further states that "[a]ll legal proceedings, including execution against the debtor, shall be stayed."

On December 31, 2003, the Official Receiver applied to the Israeli District Court for an order declaring defendant bankrupt, and requesting that a trustee of defendant's assets be appointed. This application was approved by the Israeli District Court on January 4, 2004.

The United States Supreme Court defines comity as follows:

"Comity," in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws.

Under the principle of comity, American courts generally defer to proceedings in foreign countries so long as "the foreign court had proper jurisdiction and enforcement does not prejudice the rights of the United States citizens or violate domestic public policy" (Victrix Steamship Co. S.A. v Salen Dry Cargo A.B., 825 F2d 709 [2d Cir 1987], citing Hilton v Guyot, 159 US at 202-203; Cunard Steamship Co., Ltd. v Salen Reefer Services A.B., 773 F2d 452, 457 [2d Cir 1985]). "American courts have long recognized the particular need to extend comity to foreign bankruptcy proceedings" (id. at 709, citing Cunard, 773 F2d at 458 [footnote omitted]; Restatement [Second] of Conflict of Laws § 409).

With regard to the effect of a foreign bankruptcy proceeding under New York law, courts in New York have generally deferred to foreign bankruptcy proceedings unless the foreign court lacks jurisdiction over the bankrupt, or the foreign proceeding will result in injustice to New York citizens, prejudice to creditors' New York statutory remedies, or violation of the laws or public policy of New York (Ecoban Fin. Ltd. v Grupo Acerero Del Norte, S.A., 108 F Supp 2d 349, 352 [US Dist Ct, SD NY 2000], affd sub nom. 2001 WL 40895 [2d Cir 2001], cert denied 524 US 814 [2001], citing In re Waite, 99 NY 433, 448 [1885]; SNR Holdings, Inc. v Ataka [*3]America, Inc., 54 AD2d 406 [1st Dept 1976]; Cole v Cunningham, 133 US 107, 122-123, [1890] [discussing New York law]; Drexel Burnham Lambert Group Inc. v Galadari, 777 F2d 877, 880 [2d Cir 1985] [same]; Clarkson Co. v Shaheen, 544 F2d 624, 629 [2d Cir 1976] [same]; see also Greschler v Greschler, 51 NY2d 368, 376 [1980] [New York courts generally will accord recognition to judgments rendered in a foreign country under the doctrine of comity, absent a showing of fraud in the procurement of the foreign judgment or unless recognition of the judgment would offend a strong policy of New York]; Victrix, 825 F2d at 715). "Where a foreign proceeding is in a sister common law jurisdiction with procedures akin to our own, exceptions to the doctrine of comity are narrowly construed" (In re Rubin, 160 BR 269, 282 [Bankr SD NY 1993], citing Clarkson, 544 F2d at 629-630).

Israeli liquidation procedures are comparable to the procedures found in our Bankruptcy Code (see Rubin, 160 BR at 282). As explained by the Bankruptcy Court for the Southern District of New York:

The principles of Israeli bankruptcy law are not dissimilar to those of our Bankruptcy Code. The Israeli liquidation procedures, like our own bankruptcy laws, provide for the orderly and equitable distribution of [a debtor]'s assets among all of its creditors. The Israeli proceeding is fully supervised by an Israeli court, and the liquidators are required to report to the Official Receiver at least semi-annually, and, in the end, must render a final account to obtain their release. ... All transfers, attachments, executions and the like effected after the commencement of the liquidation are deemed void ... and preferences and fraudulent conveyances are subject to avoidance ... Each creditor may prove his claim within 180 days, although the liquidator has the discretion to extend this period for good cause ... . A creditor whose claim is rejected must be notified in writing, and the decision is appealable ... . Funds are distributed under a priority scheme very similar to our own ... with no preference being given to the claims of Israeli citizens ... .

Plaintiff does not argue that the Israeli District Court lacks jurisdiction over defendant. He asserts, however, that the Agreement is unrelated to the claim he filed in the Israeli Bankruptcy Proceeding, and, thus, I should allow this action to proceed. However, plaintiff has not demonstrated that his rights will be prejudiced by the dismissal of this action or that he will be treated unjustly by participating in the Israeli Bankruptcy Proceeding (see Cunard, 773 F2d at 459). In examining the extension of comity under the Bankruptcy Code, the Second Circuit has held:

In exercising its discretion the district court is to 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.

Moreover, plaintiff will not be prejudiced since he was aware of the Israeli Bankruptcy Proceeding and, in fact, submitted himself to the jurisdiction of the Israeli court by filing a claim therein (see Rashi Textiles v Rhomberg Textil Gessellschaft M.B.H., of Austria, 857 F Supp 1051, 1055 [US Dist Ct, SD NY 1994]) [plaintiff-creditor submitted itself to the jurisdiction of the Austrian bankruptcy court by communicating with court-appointed trustee and accepting a payment from the estate even though it did not submit a claim in Austrian involuntary bankruptcy proceeding]; see also Victrix, 825 F2d at 715 ["[r]egardless of the creditor's identity, New York courts will generally recognize foreign judgments and proceedings where the creditor voluntarily submitted to the foreign court's jurisdiction], citing Phelps v Borland, 103 NY 406 [1886]; Waite, 99 NY at 439 [local debtor who submitted to foreign bankruptcy proceeding is bound by adjudication of foreign court]). Plaintiff's argument that comity should not be extended to the Israeli Bankruptcy Proceeding because he is an American citizen and the Agreement was executed in the United States is without merit (see Cunard, 773 F2d at 459 ["creditors of an insolvent foreign corporation may be required to assert their claims against a foreign bankrupt before a duly convened foreign bankruptcy tribunal"]; Cornfeld v Investors Overseas Services, Ltd., 471 F Supp 1255, 1261 [US Dist Ct, SD NY 1979], affd 614 F2d 1286 [2d Cir 1979] [it was inconsequential that plaintiff was a New York citizen where plaintiff had voluntarily associated himself with a Canadian corporation]; Lindner Fund, Inc. v Polly Peck Intl. PLC, 143 BR 807, 810 [Bankr SD NY 1992] ["deference to foreign bankruptcy proceedings is appropriate notwithstanding that the plaintiff in the United States court is an American individual or entity"]).

Plaintiff has had ample opportunity to pursue this claim in the Israeli Bankruptcy Proceeding (see Victrix, 825 at 715]). To allow plaintiff to pick and choose which of his claims to assert in the Israeli Bankruptcy Proceeding would contravene the fundamental purpose of granting comity to a foreign bankruptcy proceeding: "enabl[ing] the assets of a debtor to be dispersed in an equitable, orderly and systematic manner, rather than in a haphazard, erratic or piecemeal fashion" (Cunard, 773 F2d at 458; see also Victrix, 825 F2d at 714 [The equitable and orderly distribution of a debtor's property requires assembling all claims against the limited assets in a single proceeding; if all creditors could not be bound, a plan of reorganization would fail]; see also Ecoban, 108 F Supp 2d at 351-52 ["[c]omity is particularly appropriate and important with respect to foreign bankruptcy proceedings, where equitable principles demand that all claims against a debtor's limited assets be addressed in a single proceeding"]).

Plaintiff's contention that defendant was required to move before the Bankruptcy Court pursuant to section 304 of the Bankruptcy Code is likewise without merit. Section 304 of the Bankruptcy Code provides a vehicle for a representative of a foreign debtor to commence a proceeding in Bankruptcy Court ancillary to the main proceeding in the foreign country (see 11 USC § 304; S Rep No 989, 95th Cong, 2d Sess 35, reprinted in 1978 US Code Cong & Ad News 5787, 5821 [Senate Report]; H Rep No 595, 95th Cong., 2d Sess. 324-25, reprinted in 1978 US Code Cong & Ad News. 5963, 6281 [House Report]). Although an ancillary proceeding under [*5]section 304 of the Bankruptcy Code may be a preferred remedy, the Second Circuit has held that it is not the exclusive remedy (Cunard, 773 F2d 452).

For the foregoing reasons, comity should be extended to the Israeli Bankruptcy Proceeding. Therefore, defendant's cross motion to dismiss the complaint is granted. It is thus unnecessary to reach the parties' remaining arguments.

ORDERED that defendant's cross motion to dismiss the complaint is granted, and the complaint is dismissed with costs and disbursements to defendant, as taxed by the Clerk of the Court upon the submission of an appropriate bill of costs; and it is further

ORDERED that the Clerk is directed to enter judgment accordingly; and it is further

ORDERED that plaintiff's motion for summary judgment is denied in all respects.

______________________

J.S.C.