Limited Access to Exhibits Filed in Asbestos-Related Bankruptcy Cases was Proper Under Bankruptcy Code Section 107

DELAWARE — Appellants Honeywell and Ford filed a request seeking unlimited access to thousands of exhibits (2019 Exhibits) filed in nine Delaware bankruptcy cases commenced in connection with the debtors’ asbestos-related liabilities (Consolidated Cases). All but one of the nine Consolidated Cases was closed. The appellants argued they were entitled to indefinite access to the 2019 Exhibits, including investigating potential fraud in the claims process and advancing the appellants’ legislative and lobbying activities. The appellees (various Trust Advisory Committees and Future Claimants Representatives) opposed the request, arguing that these purposes were improper. The Bankruptcy Court allowed limited access to investigate potential fraud, and Appellants appealed.

At the time of the bankruptcy filings in the 2000s, Bankruptcy Rule 2019 required certain personal identifying information about creditors and equity holders represented by the entity preparing the statement. In 2004, the bankruptcy judge entered orders standardizing these disclosures to eliminate substantive personal information, so that the 2019 Statements could be electronically filed and publicly available. These orders did not seal the 2019 Exhibits but regulated access in light of privacy concerns. These procedures have been reviewed and approved by several courts. Litigation regarding access to these exhibits continued.

The court started its analysis by noting the common law presumption of public access to judicial records and which is codified in Bankruptcy Code Section 107. In 2005 Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act, and included privacy protections. The court then found that Appellants could not appeal the 2019 Orders enacted in 2004 and 2005; much prior litigation established that the Bankruptcy Court had authority to enact these orders. Further, Section 107(a), which governs public right to access, applied to papers that were “filed in a case” OR that were on “the dockets of a bankruptcy court,” and applied in this case.

Finding Section 107(a) applied, the court next addressed whether exceptions to public access to these documents, as outlined in Section 107 (b) and (c), applied to the 2019 Exhibits. It found that 107(c) applied, in that “a bankruptcy court ‘may protect an individual with respect to [certain] types of information to the extent the court finds that disclosure…would create undue risk of identity theft or other unlawful injury to the individual or the individual’s property.'” It was undisputed that some protectable information was present in the 2019 Exhibits. The Bankruptcy Court’s conclusion limiting access was not clearly erroneous.

The court also found that the Bankruptcy Court properly considered Appellants’ purpose in requesting access to the 2019 Exhibits, as this was authorized by Section 107(c). The Bankruptcy Court found no precedent for unlimited access to 2019 materials for uses outside of judicial proceedings, such as lobbying, which appellants conceded was one of their purposes in seeking access. Here, the only proper purpose identified by the appellants was using the 2019 Exhibits to ferret out fraud in administration of the NARCO Trust. Restrictions imposed by the Bankruptcy Court were proper.

Read the full decision here.