Enodis Corp. v. Amana Co., (Del. Ch., April 26, 2007), read opinion here. This Chancery Court decision (by letter) maintained a stay that had been imposed by the Chancery Court in favor of an adversary action in bankruptcy court. The adversary action was filed by a trustee in a Chapter 7 case (converted from a Chapter 11 case) and that action involved substantially the same issues as the case that was filed in Chancery Court. The Chancery Court matter (that was stayed) involved a declaratory judgment suit to obtain a determination about whether certain entities were merely alter egos of the debtor company such that they should be liable for the pre-bankruptcy debts of the debtor company (that had filed for bankruptcy). The trustee pursued related claims in the adversary action. That adversary action was the subject of a decision by the bankruptcy court that was appealed to the district court and is now pending appeal before the U.S. Court of Appeals for the Seventh Circuit.
In addition to the McWane (a/k/a "first-filed") doctrine [263 A.2d 281 (Del. 1970)], relied on in this decision (since the bankruptcy filing pre-dated the Chancery Court case), the Chancery Court here largely based its decision on general bankruptcy principles, and ruled that it:
"declines the plaintiffs’ invitation to ‘interrupt the deliberations of a United States circuit court in the process of deciding an appeal,’ especially when doing so could undermine the United States Bankruptcy Code’s overarching policy of facilitating an orderly and unitary disposition of all matters affecting a debtor." (citing 11 U.S.C. section 362(a)(3)(imposing a broad automatic stay during the pendency of a bankruptcy case of all judicial actions affecting a debtor); and Fort James Corp. v. Beck, 2005 WL 2000761 at *5 (Del. Ch., Aug. 16, 2005)(litigants should not be permitted to adjudicate claims relevant to the bankruptcy estate on a piecemeal basis throughout the country); Davis Int’l, LLC v. New Start Group Corp., 2006 WL 2519534 (Del. Ch., Aug 22, 2006)).