Richards Layton & Finger
 

Does Rule 2019 Apply to Ad Hoc or Informal Committees?

April, 2010

The Six Flags Decision

The debate over whether ad hoc or informal committees or groups of creditors or interest holders (“ad hoc committees”) must comply with Bankruptcy Rule 2019 recently intensified due to a split among several Bankruptcy Court decisions.  Previously, both In re Northwest Airlines Corp., 363 B. R. 701 (Bankr. S. D. N. Y. 2007), and In re Washington Mut. Inc., 419 B. R. 271 (Bankr. D. Del. 2009) (“WaMu”) held that ad hoc committees, actively participating in a case as a committee, were subject to Rule 2019.  Following these decisions, many practitioners thought the law was settled — ad hoc committees were required to file the requisite Rule 2019 disclosures — while others continued the practice of not filing Rule 2019 disclosures or only filing partial Rule 2019 disclosures.  Fueling the debate is the decision in In re Premier Int’l Holdings, Inc., 2010 WL 198676 (Bankr. D. Del. Jan. 10, 2010) (“Six Flags”), which disagreed with Northwest and WaMu, and held that an informal committee of noteholders was not a committee representing more than one creditor by consent or operation of law and therefore not subject to Rule 2019.  Thereafter, In re Philadelphia Newspapers, LLC, 2010 WL 41102 (Bankr. E. D. Pa. Feb. 4, 2010), agreed with Six Flags, evenly splitting the reported decisions.