Ad Hoc Committees and the Misuse of Bankruptcy Rule 2019

1004 Norton Journal of Bankruptcy Law and Practice [Vol. 16]
39. See Fed. R. Bankr. P. 2019(a) (requiring disclosure “unless otherwise directed by the
court”); 2019(b) (providing that the court “may” order various remedies for a failure to comply
with Rule 2019); Kaiser Aluminum Corp., 327 B.R. at 559 (“It has been recognized that Rule
2019 need not always be strictly applied.”); In re Hudson Shipbuilders, No. Civ. S.84-0757,
1985 U.S. Dist. LEXIS 17654, at *14 (S.D. Miss. July 22, 1985) (holding that “Bankruptcy
Rule 2019(b) affords the court the discretion, and does not mandate” that the court must order
a remedy); See In re I.G. Services Ltd., 244 B.R. 377, 389 (Bankr. W.D. Tex. 2000), decision
rev’d on other grounds, 263 B.R. 505 (W.D. Tex. 2000) (holding that § 105 provided power to
protect party against application of Rule 2019 where application of the rule did not serve the
purpose of protecting against improper participation in bankruptcy proceedings).
40. See e.g., Reid v. White Motor Corp., 886 F.2d 1462, 1471, 19 Bankr. Ct. Dec. (CRR)
1435, 21 Collier Bankr. Cas. 2d (MB) 902, Bankr. L. Rep. (CCH) P 73086, 14 Fed. R. Serv.
3d 1399 (6th Cir. 1989) (attorney purporting to represent class action claimants in bankruptcy
failed to comply with Rule 2019 because attorney failed to prove his “authority to act as an
agent for any purported class”); In re Great Western Cities, Inc. of New Mexico, 88 B.R. 109,
112, Bankr. L. Rep. (CCH) P 72402 (Bankr. N.D. Tex. 1988), order vacated, 107 B.R. 116
(N.D. Tex. 1989) (Rule 2019 required attorney claiming to represent class of claimants beyond
immediate client must show authority to act as “agent” for class members).
41. See Wilson v. Valley Elec. Membership Corp., 141 B.R. 309, 312-13, 23 Bankr. Ct.
Dec. (CRR) 97 (E.D. La. 1992) (distinguishing between the authority of attorney-at-law and
attorneys-in-fact in bankruptcy proceedings: “[U]nlike an attorney[-at-law], and attorney in fact
is an agent for his client or principal”).
42. See In re Kaiser Aluminum Corp., 327 B.R. 554, 559, 54 Collier Bankr. Cas. 2d (MB)
1139 (D. Del. 2005) (“As Rule 2019(b) suggests, the operative portion of the agreements
deposited under 2019(a) are the representation provisions“) (emphasis added).
43. Jonathan S. Henes, Rule 2019 Opinion May Transform the Dynamics of Chapter 11
Cases, Daily Bankr. Rev., March 7, 2007 (Attorney Henes is a partner in the restructuring group
of Kirkland & Ellis LLP); see also Conray C. Tseng, Disclosure of Information by Distressed
Claims Purchasers, Weil, Gotshal & Manges Bankruptcy Bulletin, March 2007 at 1, 4 (“in
the future, debtors and other parties in interest may use Rule 2019 to gain access to increase
bargaining leverage”).
44. See Jonathan S. Henes, Rule 2019 Opinion May Transform the Dynamics of Chapter
11 Cases, Daily Bankr. Rev., March 7, 2007 (complaining that “ad hoc committees retain
professionals and attempt to influence the pace and the scope of the debtor’s restructuring” and
expressing hope that, after Northwest Airlines, “[t]he influential role of this new type of ad hoc
committee may soon diminish”).
45. See earlier discussion of TIA, supra note 13.
46. See Mark Berman & Jo Ann J. Brighton, Will the Sunlight of Disclosure Chill Hedge
Funds, Am. Bankr. Inst. J., May 2007, at 62.
47. See In re I.G. Services Ltd., 244 B.R. 377, 389 (Bankr. W.D. Tex. 2000), decision rev’d
on other grounds, 263 B.R. 505 (W.D. Tex. 2000) (stating that “[t]he only interest that the court
might have in enforcing the letter of Rule 2019 is to protect these very investors” and denying
motion by press to require strict public disclosure of Rule 2019 information because rule was
designed to protect investor participation in bankruptcy, not the press).