Another member of the Delaware Bankruptcy Court has weighed in on the appropriate scope of Bankruptcy Rule 2019 (see previous post). Judge Brendan Shannon signed an order a few days ago that directs the Ad Hoc Committee of Noteholders in the chapter 11 case of Accuride Corporation to comply with the rule’s disclosure requirements. No written opinion has been issued and the hearing transcript is not yet available, so Judge Shannon’s reasoning, and whether he ruled broadly or narrowly, is not yet known. The Official Equity Committee in that case, which had moved for the disclosure, argued in its papers that the facts were similar to those faced by Judge Walrath in Washington Mutual and distinguishable from those presented to Judge Sontchi in Six Flags, in that the Noteholders allegedly were purporting to act on behalf of a larger constituency.
Until such time as the Rules Committee, as discussed in the previous post, promulgates a formal amendment to Bankruptcy Rule 2019, this is certain to remain a highly contentious issue. Purchasers of distressed debt that seek to act as a group in order to further their interests are invariably going to be challenged in other cases to make disclosures that could include sensitive or proprietary pricing and timing information.