Judge Martin Glenn’s recent decision in an adversary proceeding related to the General Motors bankruptcy showcases the difficulties parties, especially ones concerned with protecting the identity of their owners, may encounter when requesting that bankruptcy courts seal or redact confidential information that is required under the Bankruptcy Rules, which are the counterparts of the Federal Rules of Civil Procedure. Bankruptcy Rule 7007 was the focus in Motors Liquidation Company Avoidance Action Trust et al v. JPMorgan Chase Bank, N.A. (In re Motors Liquidation Company), Adv. Pro. No. 09-0054 (MG) 2016 WL 7187298 (Bankr. S.D.N.Y. Dec. 9, 2016) (Motors). Parties concerned with protecting sensitive information should be ready to provide concrete, factual arguments in favor of filing documents under seal. Recent New York decisions, and the Motors decision in particular, provide guidance to practitioners as to possible effective strategies for protecting such sensitive information.
Filing Under Seal
The Bankruptcy Code generally requires that all papers be filed publicly and without redactions. While exceptions exist, N.Y. bankruptcy courts view the exceptions narrowly and have described filing under seal or redacting documents to be an “extraordinary measure[].” In re Anthracite Capital, 492 B.R. 162, 171 (Bankr. S.D.N.Y. 2013). This presumption in favor of disclosure is not insurmountable, as §107(b) of the Bankruptcy Code provides that a court must protect an entity’s trade secrets, or confidential research, development or commercial information. 11 U.S.C. §107. While the commercial information exception does not provide a “safe harbor for those who crave privacy,” it does protect information that is critical to the business operations of the party seeking protection. Anthracite Capital, 492 B.R. at 178. Application of these exceptions is generally strict, as courts usually only look to whether the information falls within an enumerated exception.
