As part of various re-insurance transactions, Latino Americano de Reaseguros, S.A. (LARSA) promised to reimburse the Insurance Corporation of Hannover (Hannover) (plaintiff) in the event that Hannover suffered serious losses resulting from the transactions. LARSA requested that Banco Cafetero (defendant) issue a standby letter of credit in favor of Hannover, secured by collateral, to be paid upon LARSA’s default. Thereafter, LARSA filed for the Panamanian equivalent of bankruptcy. Hannover filed suit against Banco Cafetero in the United States, demanding payment on the letter of credit based on LARSA’s failure to make the promised reimbursements. LARSA then filed suit in a New York bankruptcy court, seeking an injunction against Hannover’s collection on the letter of credit. The bankruptcy court issued a stay of Hannover’s suit under the automatic-stay provisions of the United States Bankruptcy Code (bankruptcy code). Hannover appealed.