## Facts

- Northwest Airlines Corporation and affiliates filed for Chapter 11 relief in the U.S. Bankruptcy Court for the Southern District of New York.
- Certain equity security holders who collectively held about 27% of Northwest’s stock were required by the bankruptcy court to act as an ad hoc committee (the equity committee).
- The court directed the equity committee’s members to file verified disclosures under Bankruptcy Rule 2019, including information about their holdings and their purchases and sales of Northwest securities.
- The equity committee sought permission to file under seal (or redact) the portions of the Rule 2019 disclosures that revealed members’ trading activity and related pricing information, arguing this would reveal their cost basis and harm them in later sales to third parties.
- Northwest (the debtor), the Official Committee of Unsecured Creditors, and Bloomberg L.P. opposed the sealing request, relying on the public-access rules for bankruptcy filings and the purpose of Rule 2019.
- The equity committee argued that it was not a court-appointed fiduciary for other shareholders and that its trading details were commercially sensitive.

## Issues

1. Whether the equity committee members could seal or redact the trading and pricing information required by Bankruptcy Rule 2019 as “confidential commercial information” under 11 U.S.C. § 107(b)(1), despite the general rule of public access in 11 U.S.C. § 107(a).

## Decision

- The court denied the equity committee’s motion to seal the trading and pricing portions of the Rule 2019 disclosures.
- The court held that the committee members did not show that the information qualified as “confidential commercial information” within the meaning of § 107(b)(1).
- The court ordered the equity committee to file an unredacted Rule 2019 statement on the public docket within a short time period (three business days).

## Legal Principles

- Papers filed in a bankruptcy case are public records open to examination under 11 U.S.C. § 107(a), reflecting a strong presumption of public access to court filings.
- The sealing exception in 11 U.S.C. § 107(b)(1) for “confidential commercial information” is read narrowly; the party seeking protection must show more than ordinary discomfort from disclosure and must identify a real, non-speculative risk of serious commercial harm of the type the statute addresses.
- Bankruptcy Rule 2019 requires committees and groups that represent multiple creditors or equity holders to disclose the identities of members and their economic interests, including acquisition and trading information, so other parties and the court can evaluate potential conflicts and incentives.
- An ad hoc committee’s claim that it is not a fiduciary does not remove it from Rule 2019’s disclosure requirements when it acts as a coordinated group seeking to influence the Chapter 11 case.
- Concerns that disclosure of cost basis might affect later securities trading negotiations generally do not, by themselves, justify sealing in light of the openness required by § 107(a) and the transparency goals of Rule 2019.

## Conclusion

In Northwest II, the bankruptcy court refused to let an ad hoc equity committee shield Rule 2019 trading and price disclosures from public view, holding that § 107(b)(1) did not protect the committee’s cost-basis and trading-disadvantage concerns and that Rule 2019’s transparency purpose required public filing of the information.


In re Northwest Airlines Corp. (Northwest II), 363 B.R. 704 (2007)