Heightened Rule 2019 Disclosure Obligations for Committee Members after Decisions in Northwest Airlines and Owens Corning
Jordan Siev
Anderson Kill & Olick, PC; New York
Andrea Pincus
Anderson Kill & Olick, PC; New York
John Scott
Anderson Kill & Olick, PC; New York
Creditors’ committees, both ad hoc and official, play an integral role in the reorganization process by making certain that the interests of the debtor’s creditors are adequately represented and protected. The interests of the individual members (often institutional holders) in keeping information concerning their holdings and trading in the debtor’s securities confidential may conflict with Federal Rule of Bankruptcy Procedure 2019, which requires that certain information about the individual committee members’ holdings be disclosed to the public. Neither the conflict nor the rule are new, but the issues are exacerbated by recently enhanced disclosure obligations and expansion of electronic filing, which gives virtually anyone willing to pay a nominal fee the ability to access this information. Although Rule 2019 has been in existence for a number of years, it has increasingly been used in a new way: offensively by debtors in an attempt to slow down or thwart the efforts and momentum of increasingly activist hedge funds and other institutional investors taking aggressive positions in bankruptcy cases.
This article discusses the recent Northwest Airlines and Owens Corning bankruptcy court decisions mandating heightened and more detailed 2019 disclosures by committee members in the wake of demands by aggrieved debtors for otherwise confidential and competitive investment information. These decisions evidence the inherent conflict between these competing interests, and provide insight into how courts in the future may fashion remedies that address the concerns of committee members while at the same time protecting the public’s interest in obtaining full disclosure.
Thanks to Departing Co-Chair, Glenn Siegel
Glenn Siegel is resigning as co-chair of the committee, effective at the conclusion of the Annual Spring Meeting. Glenn not only founded the committee, but has been chair or co-chair of the committee since its founding. He has done an excellent job generating membership, devising informative, interesting and cutting-edge programs and enouraging publications, and he will be missed. In addition to founding and leading the committee, Glenn's accomplishments include maintaining a keen eye for developing trends involving debt and equity of public companies, enriching committee meetings with commentary and materials that often anticipated key trends, and organizing a publication project under which a number of articles on claims trading were published in the ABI Law Review. We thank Glenn for his leadership and many contributions over the years.
New Committee Co-Chair Announced
The committee is pleased to announce its new co-chair, Slate Dabney of King & Spalding LLP in New York, who will take over for departing co-chair Glenn Siegel at the conclusion of ABI’s Annual Spring Meeting. Slate is a partner in the King & Spalding Financial Restructuring Group and can be reached by phone at (212) 556-2287 or e-mail sdabney@kslaw.com. Please come meet him at the committee meeting on Saturday morning, April 14, 2007.
Newsletter Submissions
The committee welcomes submissions on a wide range of topics. If you are interested in submitting articles for publication in this newsletter, please contact Andrea Pincus, newsletter editor, at apincus@andersonkill.com, or in person at the Annual Spring Meeting. Articles should be bankruptcy-related, relevant to either public companies and/or claims trading and should be approximately 1,000 words in length.
Agenda for the 2007 Annual Spring Meeting
Please join the Committee for its panel presentation, “Official Committees – What Is Adequate Representation?” at ABI’s Annual Spring Meeting on Saturday, April 14, 2007 from 8-9:30 a.m. The presentation will focus on the issue of adequate representation by official committees of creditors and equity-holders under §1102(a)(4) of the Code. Topics will include committee formation by the U.S. Trustee, case studies of disputes concerning adequate representation, the interplay between adequate representation and contests between professionals for committee representation, foreign debt and equity-holders and the use of proxies, claims trading and committee bylaws.
Our outstanding panel includes Deirdre Martini, former U.S. Trustee for Region 2; Jim Stang of Pachulski Stang Ziehl Young Jones and Weintraub LLP; and Scott Beecher, General Counsel & Chief Compliance Officer for Murray Capital Management Inc., which was a moving party in the Werner case in a dispute concerning adequate representation. Ms. Martini was involved in committee formation in a number of public company cases in her position as U.S. Trustee for Region 2, and Mr. Stang was involved in an adequate-representation dispute in the Spokane Diocese case.