In re GHR Energy Corp., Bankruptcy No. 4-83-00056-G
Decision Date | 26 September 1983 |
Docket Number | 4-83-00092-G to 4-83-00095-G and 4-83-00136-G.,4-83-00060-G,Bankruptcy No. 4-83-00056-G |
Citation | 33 BR 451 |
Parties | In re GHR ENERGY CORP., f/k/a Good Hope Refineries, Inc., GHR Companies, Inc., f/k/a Good Hope Industries, Inc., GHR Pipeline, Inc., f/k/a Southern Pipeline Corp., Southern States, Inc., Southern States Exploration, Inc., Laredo Exploration, Inc., and Southern Petroleum Trading Co., Ltd., Debtors. |
Court | U.S. Bankruptcy Court — District of Massachusetts |
Stephen Gordon, Boston, Mass., for debtor Good Hope Energy Corp.
Andrew Griesinger, Robert M. Gargill, Boston, Mass., for debtors' secured bank creditors Continental Illinois Nat. Bank & Trust Co. of Chicago.
Sumner Darman, Boston, Mass., Creditors' Committee GHR Companies.
Joseph Braunstein, Boston, Mass., Creditors Committee GHR Energy.
Van Oliver, Dallas, Tex., Creditors Committee remaining cases, Energy.
Gerrard Kelley, Asst. U.S. Trustee, Boston, Mass.
MEMORANDUM AND ORDER ON DEBTORS' MOTION FOR EXAMINATION
The above-captioned debtors ("debtors") filed a motion for a Rule 2004 examination of James W. Glanville ("Glanville"), general partner, Lazard Freres & Co., New York, New York. The motion failed to set forth Glanville's relationship with the debtors. It was not until the Court received the objection of Continental Illinois National Bank and Trust Company of Chicago, acting as agent for the debtors' secured bank creditors, ("banks") that the Court became informed of Glanville's role in these reorganization proceedings. To wit: Glanville was hired by the law firm of Wachtell, Lipton, Rosen & Katz (co-special counsel to the banks) to analyze the financial feasibility of converting a visbreaker to a delayed coker. This employment was entered into in anticipation of the debtors' seeking the Court's approval to expend funds to convert the visbreaker. It was also agreed that Lazard Freres & Co. would be available to testify at any hearing on such an application if so requested by the banks. To date, the Court has not been requested to approve such an expenditure.
The banks allege that Rule 26(b)(4)(B) of the Federal Rules of Civil Procedure prohibits the debtors from examining Glanville unless exceptional circumstances are shown.1 Further, the banks allege this is a contested matter which, under Bankruptcy Rule 9014, makes Rule 26(b)(4)(B) applicable.2 Bankruptcy Rule 2004 provides, in relevant part:
It is clear that the scope of a Rule 2004 examination is unfettered and broad. In re Foerst, 93 F. 190, 191 (S.D.N.Y.1899). It may be "exploratory and groping". Sachs v. Hadden, 173 F.2d 929, 931 (2d Cir.1949). "The breadth of the language employed in the Rules so all encompassing as semantically to include and encourage harassment on every human subject." In re Georgetown of Kettering, 17 B.R. 73, 75, 8 B.C.C. 934, 935 (Bkrtcy.S.D. Ohio 1981).
The filing of a petition in bankruptcy creates an estate, the administration of which is subject to policing by the bankruptcy court with all its attendant rules of procedure and substantive law. In many ways, the rights of parties who dealt with the debtor prior to the date the petition was filed are altered by the filing of the petition. However unfair this may seem, I suppose all businessmen must be aware that any deals entered into today may be modified by the subsequent financial demise of the other party. The broad scope of a Rule 2004 examination is merely one of the peculiar characteristics of bankruptcy law and procedure. Just as, e.g., payments to creditors within ninety days of the filing of a petition are subject to being voided, creditors are stayed from continuing foreclosure actions begun prior to the filing, and certain pre-petition liens may be avoided, after the filing of a petition, any person may be examined relative to the etc. of the debtors on a wide variety of topics.
That Rule 2004 offers few of the procedural safeguards provided by Rule 26 is clear. The motion "may be heard ex parte or it may be heard on notice". Advisory Committee Note to Rule 2004.
In re Dupont Walston, Inc., 4 B.C.D. 61, 63 (Bankr.S.D.N.Y.1978) ( ).
The discovery safeguards of Rule 26 are intended to promote something other than the aims of a Rule 2004 examination. The reason for enacting Rule 26(b)(4)(B) was to prevent "unfairness" which would result if one party gained information possessed by an expert hired and paid for by an opposing party. Pearl Brewing Co. v. Jos. Schlitz Brewing Co., 415 F.Supp. 1122 (S.D.Tex.1976). (citations omitted). Id. at 1138.4 It cannot be disputed, that these Rules were enacted with different goals in mind. Therefore, to apply the standards of Rule 26(b)(4)(B) to a Rule 2004 examination would be inequitable, and, in fact, be without foundation. In the proper...
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