In re Fibermark, Inc., 04-10463.
| Decision Date | 16 August 2005 |
| Docket Number | No. 04-10463.,04-10463. |
| Citation | 330 B.R. 480 |
| Court | U.S. Bankruptcy Court — District of Vermont |
| Parties | In re FIBERMARK, INC., FiberMark North America, Inc., and FiberMark International Holdings, Inc., Debtors. |
D.J. Baker, Skadden, Rosalie Walker Gray, Adam S. Ravin, David M. Turetsky, Arps, Slate, Meagher & Flom LLP, New York, NY, Jennifer Emens-Butler, Raymond J. Obuchowski, Bethel, VT, Edward J. Meehan, Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC, for Debtors.
GRANTING MOTIONS TO UNSEAL EXAMINER'S REPORT, GRANTING ALTERNATIVE RELIEF OF REDACTION AND LEDGER AND DENYING MOTIONS TO KEEP EXAMINER'S REPORT UNDER SEAL
Harvey R. Miller, Esq., in his capacity as the examiner in this case, filed a report early last month which included conclusions that two members of the Official Committee of Unsecured Creditors (the "Committee") and the Committee's counsel had breached certain fiduciary duties. Those Committee members and their counsel now seek to keep the Examiner's report ("the Report") under seal. The primary issue presented is whether these parties have shown that the contents of the Report warrant an exception to the general rule, under 11 U.S.C. § 107, that all court documents should be public. They also argue that the Report should be kept under seal because the Examiner has improperly included in the Report certain information that is protected under the attorney client privilege and work product doctrine.
For the reasons set forth below the Court finds that (1) the evidentiary protection arguments are distinct from those under § 107; (2) this is the appropriate time for the Court to consider both assertions of protection under the attorney client privilege and work product doctrine as well as whether the Report should be under seal; (3) it is appropriate to redact certain information in the Report based upon attorney client privilege and the work product doctrine; (4) the Report does not qualify for exception from the general rule that all court documents should be public records; (5) to the extent the Report might be misconstrued to reflect judicial findings or determinations, that can be remedied by the inclusion of a ledger on the Report; and (6) as a consequence of these findings the Court will enter on the docket other documents and records in this case that have been confidential to date. Therefore, the Court will enter the Report on the docket, with certain text redacted and a cautionary ledger affixed, and enter other related documents on the docket thereafter, pursuant to separate order.
When the Debtors filed the instant chapter 11 cases on March 31, 2004, it appeared to all parties and the Court as if the Debtors were poised to emerge from chapter 11 by the end of 2004. The Debtors, the U.S. Trustee, the Committee and the primary secured creditor were proceeding in a remarkably collaborative fashion and projected that a Joint Plan of Reorganization would be filed in the fall and confirmed by year's end. All proceeded according to that schedule through the filing of a Joint Disclosure Statement and Plan in November, 2004. However, in January, 2005 the issue of corporate governance of the post-confirmation entity caused the collaboration to begin to disintegrate.1 A stalemate occurred which ultimately derailed the reorganization process and led the Debtors to withdraw their plan on March 21, 2005 (doc. # 1332). Based upon a number of allegations by several parties against several other parties (including principals of the Debtor and the members of the Committee), coupled with the Debtors' inability to proceed with their case under the cloud of these many allegations and the stalemate over post-confirmation governance, the Court issued an Order to Show Cause (doc. # 1354) directing parties to present arguments as to why an examiner should not be appointed to investigate all of the allegations, and make recommendations, on both the alleged breaches of fiduciary duty and the revitalization of the Debtors' reorganization.
The Debtors, the U.S. Trustee, the Committee, Wilmington Trust Company ("Wilmington Trust"), Silver Point Capital LP ("Silver Point"), AIG Global Investment Corp. ("AIG"), Post Advisory Group LLC ("Post"), and Alex Kwader ("Kwader," the CEO of FiberMark) (collectively, the "interested parties") all filed papers supporting (to varying extents) the appointment of an examiner (see docs # 1393, 1392, 1396, 1342 [fn 3], 1377, 1395, and 1399, respectively). After consulting with the interested parties, the U.S. Trustee recommended and the Court appointed Mr. Harvey R. Miller to serve as examiner. (Mr. Miller is hereafter referred to as "the Examiner"). Prior to making this recommendation, the U.S. Trustee had consulted with all key players and conducted its own independent inquiry into the Examiner's competence and disinterestedness, as set forth in the statement filed with the Court on April 18, 2005 (doc. # 1409). No party objected to the Examiner's selection or questioned his expertise to serve in this capacity. All interested parties participated in a hearing defining the scope of the Examiner's duties on April 19, 2005, and agreed to the scope of the Examiner's duties. An Order was entered later that day articulating the scope of duties, timeframe and fee cap for this appointment (doc. # 1422). That order provided:
1. The United States Trustee's Office is directed to appoint an independent examiner to conduct an investigation into the following matters:
a. the transfer of the Debtors' executives' claims, including but not limited to, the claims of Alex Kwader, and other persons who were employees of the Debtors at the time of the transfer of their claim(s), to Silver Point Capital, L.P. ("Silver Point"), the nature and extent of the disclosure of those transfers and whether breach(es) of fiduciary duties to the estate resulted;
b. the transfer of the claim of former committee member Solutions Dispersions, Inc. to Silver Point;
c. the quality of the "screening wall" Silver Point, and the other members of the Creditors' Committee, established in accordance with this Court's Order Approving Specified Information Blocking Procedures and Permitting Trading in Securities of the Debtors Upon Establishment of a Screening Wall (doc. # 684) (the "Trading Order"), whether it was breached, and whether the Trading Order was violated;
d. the dispute among Committee members regarding corporate governance issues and whether any Committee member breached its fiduciary duty to act in the best interest of all creditors; and
e. any other matter the Examiner deems necessary and relevant to the complete and full investigation of the four enumerated areas included herein.
2. In order to meet his or her responsibilities, the Examiner has the authority to retain counsel, to issue subpoenas, and to require document production and conduct examinations under FED. R. BANKR. P.2004, provided the Examiner exercises this authority in a manner which is consistent with the Examiner's obligation to complete the investigation in a prompt and cost-effective fashion.
3. The Official Committee of Unsecured Creditors and its members, Alex Kwader and other individuals who were employed by the Debtors when his or her individual claims were transferred to Silver Point, representatives of Solutions Dispersions, Inc. and all other parties in interest who have information that the Examiner deems relevant to this investigation shall cooperate fully with the Examiner.
4. The Examiner shall commence his or her investigation immediately upon the Court's approval of the United States Trustee's appointment of the Examiner.
5. The Examiner shall be compensated at ordinary hourly rates, with compensation to be paid in accordance with 11 U.S.C. § 330(a)(1), the Federal Rules of Bankruptcy Procedure, the District of Vermont Local Rules and the United States Trustee Fee Guidelines.
6. The compensation of the Examiner, including the compensation of his or her professionals' and the expenses of both, are limited and shall not exceed $200,000. Application and allowance of said fees will be paid under 11 U.S.C. § 330 as set forth in ¶ 5, supra. This limitation may be modified upon motion of the Examiner and for good cause shown. No compensation shall be paid to the Examiner or the Examiner's professionals without prior approval of the Court.
7. In the event that the Examiner finds that a Committee member or any other party has violated the Trading Order, has breached fiduciary duties, or has acted to intentionally thwart the plan confirmation process in these cases, the Examiner shall include in the report recommendations regarding
(a) how the culpable conduct should affect the allocation of the cost of the Examiner;
(b) whether such conduct warrants the imposition of sanctions against any such party, including without limitation, the avoidance of claims transfers or subordination of claims; and (c) any such other recommendations the Examiner has based upon the totality of his or her findings.
8. As set forth in its Exclusivity Order of even date, no proposed plans or disclosure statements may be filed by any party during the Examiner's forty-five (45) day investigation period, except that the Debtors may file a consensual plan during this time (with consensual defined to include the unanimous consent of all members of the Official Committee of Unsecured Creditors).
9. The Examiner shall file his or her report with the Court by 4:00 P.M. on June 8, 2005.
(doc. # 1422).
On May 10, 2005, counsel to the Committee filed an emergency motion asking for guidance from the Court on how to respond to the Examiner's request for production of documents...
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