Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

The Bankruptcy StrategistKickerFeaturesTopicsCommercial LawSectionsNewsLJN Newsletters

Does Rule 2019 Apply to Ad Hoc or Informal Committees?

By Daniel J. DeFranceschi
March 26, 2010

The debate over whether ad hoc or informal committees or groups of creditors or interest holders (“ad hoc committees“) must comply with Bankruptcy Rule 2019 recently intensified due to a split among several Bankruptcy Court decisions. Previously, both In re Northwest Airlines Corp., 363 B. R. 701 (Bankr. S. D. N. Y. 2007), and In re Washington Mut. Inc., 419 B. R. 271 (Bankr. D. Del. 2009) (“WaMu“) held that ad hoc committees, actively participating in a case as a committee, were subject to Rule 2019. Following these decisions, many practitioners thought the law was settled ' ad hoc committees were required to file the requisite Rule 2019 disclosures ' while others continued the practice of not filing Rule 2019 disclosures or only filing partial Rule 2019 disclosures. Fueling the debate is the decision in In re Premier Int'l Holdings, Inc., 2010 WL 198676 (Bankr. D. Del. Jan. 10, 2010) (“Six Flags“), which disagreed with Northwest and WaMu, and held that an informal committee of noteholders was not a committee representing more than one creditor by consent or operation of law and therefore not subject to Rule 2019. Thereafter, In re Philadelphia Newspapers, LLC, 2010 WL 41102 (Bankr. E. D. Pa. Feb. 4, 2010), agreed with Six Flags, evenly splitting the reported decisions.

One side of the debate argues for increased disclosure of the kind of information covered by Rule 2019, consistent with the “open kimono“ policy of the Bankruptcy Code. To these advocates, providing such information will further level the playing field, presumably allowing parties in interest to negotiate with more pertinent information at hand, thereby resulting in better and more equitable distributions to all parties in interest. On the other side of the debate are those who seek to protect their confidential and proprietary trading information, and who outside the bankruptcy context carefully guard such information from disclosure. Those on this side of the debate argue that forcing disclosure of such information would actually result in reduced participation by various parties with available financing for Chapter 11 cases, to the detriment of debtors and their estates.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It Image

Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?

Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

The DOJ's Corporate Enforcement Policy: One Year Later Image

The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.

A Lawyer's System for Active Reading Image

Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.

Protecting Innovation in the Cyber World from Patent Trolls Image

With trillions of dollars to keep watch over, the last thing we need is the distraction of costly litigation brought on by patent assertion entities (PAEs or "patent trolls"), companies that don't make any products but instead seek royalties by asserting their patents against those who do make products.