In re Thow

• Decision Date: 14 December 2007
• Docket Number: No. 05-30432.,05-30432.
• Parties: In re Ian Gregory THOW, Debtor.
• Court: U.S. District Court — Western District of Washington

392 B.R. 860

In re Ian Gregory THOW, Debtor.

No. 05-30432.

United States District Court, W.D. Washington.

December 14, 2007.

Larry Feinstein, Vortman & Feinstein, Seattle, WA, for debtor.

Bruce W. Leaverton, Lane Powell, PC, Seattle, WA, for Canadian Trustee.

DECISION ON MOTIONS FOR ACCESS

PHILIP H. BRANDT, Bankruptcy Judge.

Before the court are motions brought by news media seeking to intervene in this Chapter 15¹ proceeding for the limited purpose of gaining access to the Rule 2004 examination of the Debtor, taken by the foreign representative, and to the record of that examination (which has not been filed), as well as access to any future examinations.

I conclude that the public interest in allowing the media to bring their motions is cause for intervention, but that the Rule 2004 examination is in the nature of discovery, and good cause to deny press access has been established.

Accordingly, I will GRANT intervention but DENY access.

I. FACTS

On 2 November 2005, Wolridge Mahon, an accounting firm and a licensed trustee in British Columbia, Canada, (the "Canadian Trustee") filed a petition for recognition of the voluntary bankruptcy case commenced by Mr. Thow on 21 July 2005, pending before the Supreme Court of British Columbia, In the Matter of the Bankruptcy of Ian Gregory Thow, 2005 BCSC 1299, as a foreign main proceeding. § 1502(4), (7). Chapter 15, enacted as part of BAPCPA, incorporated the Model Law on Cross-Border Insolvency, promulgated by UNCITRAL (The United Nations Commission on International Trade Law) at its Thirtieth Session, 12-30 May 1997, into the Bankruptcy Code. I entered a recognition order on 10 November 2005 (docket no. 16).

According to the Administrative Office of the United States Courts, this was the first recognition order under Chapter 15. There was an earlier Chapter 15 petition, World Renown Enterprises, a "non-domestic non-resident," No. 05-32900, E.D. Penn., filed 27 October 2005, but it was dismissed by the court sua sponte the following day because the person purporting to be its authorized representative filed the petition in violation of a prior order barring him from filing any further bankruptcies.

Ian Gregory Thow ("Thow" or "Debtor") was an investment advisor doing business in Victoria, British Columbia, with Berkshire Investment Group. In early July 2005 he faced multiple court and administrative proceedings initiated by the British Columbia Securities Commission, which issued orders to freeze Thow's assets, and dozens of lawsuits filed in Canada by investors asserting approximately $28 million (Canadian, although the relative values of the U.S. and Canadian dollars are of no moment here) in claims against him. After submitting a proposal, i.e., a plan, in his Canadian bankruptcy, Thow (a U.S. citizen) relocated to the United States.

On 22 December 2006 I entered an ex parte order (docket no. 24) authorizing the Canadian trustee to conduct an examination of Thow pursuant to Rule 2004. Disputes arose about the scope of the examination, and after proceedings in the Canadian bankruptcy, the Canadian court entered an order on 22 August 2007:

THIS COURT REQUESTS:

1. the aid and assistance of the United States Bankruptcy Court and, in particular, the aid and assistance of the United States Bankruptcy Court, Western District of Washington at Seattle (the "US Court");

2. that the bankrupt herein, Ian Gregory Thow, be examined under oath by counsel for the Trustee, Wolrige Mahon Limited, and that such examination deal with the conduct of the bankrupt and his business and financial affairs, and that the bankrupt be required to produce to counsel for the Trustee at or before any such examination all of the bankrupt's records . . . tax returns and all other documents dealing with his financial circumstances;

3. that such examination be conducted in the presence of a U.S. Court Judge or alternatively, at or nearby the courtroom of the Judge of the U.S. Court presiding over the bankrupt's Chapter 15 case, such that the bankrupt may be brought before the Judge in person and the U.S. Court can readily enforce this Order with appropriate sanctions, should the bankrupt fail or refuse to testify, produce documents or otherwise comply in any respect with this Order[.]

Order No. B051318, Vancouver Registry (the "BCSC Order").

Thereafter I entered a stipulated order on 16 October 2007 (docket no. 49), to which the BCSC Order is attached as exhibit B. Thow stipulated to be examined by the Canadian Trustee's counsel, and the order required him to

answer under oath as to the conduct of Mr. Thow and his business and financial affairs including, without limitation: (a) the property of the debtor; (b) the debtor's income; (c) the debtor's expenses; (d) the debtor's employment; (e) details of all premises leased by the debtor in Seattle or elsewhere since the date of debtor's Canadian bankruptcy; (f) dispositions of property by the debtor; (g) any monies paid to the debtor since the date of the debtor's Canadian bankruptcy; (h) any property of the debtor located outside of Canada; and (i) those topics addressed in the written questions attached to the Court's prior order.

The 2004 examination was scheduled to be taken at the federal courthouse in Seattle on Monday, 29 October 2007.

Multiple Canadian news organizations contacted chambers and the clerk's office in the latter part of the week preceding the scheduled examination, inquiring whether reporters could cover the examination. They were advised by staff that the parties would need to be heard, but that they could send reporters who might or might not be allowed to attend the examination. Staff advised counsel of the inquiries, and so noted on the docket.

On Monday morning, a jury room was set aside for the examination, in part because the digital recording system in the courtroom is always on. Reporters from CHEK-TV, a Victoria television station, the Times-Colonist, a Victoria daily newspaper, and the Canadian Broadcasting Company were present in the courtroom seeking to attend the examination.

After a brief conference in chambers, requested by the parties' counsel, I convened court and heard the journalists' informal requests to attend the examination, made orally and without counsel, and the parties' oral objections to those requests, which were along the lines of their formal arguments recounted below.

I ruled that the media could not attend the examination but could move to intervene and seek a transcript. Thereafter, CHEK-TV and the Times-Colonist jointly filed the instant motion (docket no. 53). Global BC TV, owner of another Victoria, B.C., television station joined by later filing a brief motion requesting the same relief and with the same counsel (docket no. 63). The moving parties (collectively the "News Media") request intervention, an order that an audio recording or written transcript of the examination be filed and made available to them, and that they be permitted to attend future examinations.

II. JURISDICTION

This is a core proceeding within this court's jurisdiction. 28 U.S.C. § 1334(a) and (b), and 157(a) and (b)(2)(P); LGR 7, part I, Local Rules, W.D. Washington.

III. DISCUSSION

This matter came on for hearing on 8 November 2007 on the News Media's motions. I have considered those, Debtor's objection (docket no. 56), the Canadian Trustee's objection (docket no. 57), the News Media's reply (docket no. 62), the supporting declarations, and arguments of counsel.

A. Motion to Intervene

The press may intervene in actions to which it is not otherwise a party, including a bankruptcy case, to move for access to court records or to dissolve a protective order. In re Symington, 209 B.R. 678, 690 (Bankr.D.Md.1997); In re Apex Oil Co., 101 B.R. 92, 95-96 (Bankr.E.D.Mo.1989); In re Ionosphere Clubs, Inc., 156 B.R. 414, 431 n. 6 (S.D.N.Y.1993). None of the News Media asserts a claim against Thow, or is otherwise a party in interest.

It is undisputed that there is public interest in these proceedings, as evidenced by the press clippings attached to the News Media's motion as Exhibit A (docket no. 53), of which I take judicial notice. FRE 201. Although the interested public is Canadian, no party contends that nationality is significant, and the domestic public has, as always, an interest in the proper functioning of the courts.

Thow objects to intervention, arguing that there is no common question of law or fact. However, he concedes that Rule 2018² permits limited intervention by a third party to challenge a protective order. In re Alterra Healthcare Corp., 353 B.R. 66, 70-72 (Bankr.D.Del.2006). This proceeding is not such a challenge, but it is functionally the equivalent, and implicates the same issues.

Here, as in Apex, it is disputed whether or not the documents requested by the News Media would be judicial records (it is not clear that any yet exist, and none have been filed), and the News Media argue that the 2004 examination is a judicial proceeding. Permitting the News Media to address the merits of their motions for access is cause for intervention, see Apex Oil, 101 B.R. at 96, and I will grant those motions.

B. Motion for Access

1. Court proceeding?

Rule 2004 provides:

On motion of any party in interest, the court may order the examination of any entity . . . [relating] only to the acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor's estate, or to the debtor's right to a discharge.

Rule 2004 examinations are generally broader in scope than pre-trial depositions authorized under FRCP 26, being "in the nature of a fishing expedition." In re Apex Oil Co., 101 B.R. 92, 102 (Bankr. E.D.Mo.1989). See also In re Enron Corp., 281 B.R. 836, 840 (Bankr.S.D.N.Y. 2002).

The News Media argue that they had a right to attend the Rule 2004 examination and to a recording or the transcript of...