Summary
In Big M, the court had to decide whether it would grant a motion to compel the production of documents that it was claimed were privileged.
Summary of this case from Official Comm. Unsecured Creditors of HH Liquidation, LLC v. Comvest Grp. Holdings, LLC (In re HH Liquidation, LLC)Opinion
Case No: 13-10233 (DHS)
04-17-2013
Re: In re Big M, Inc.
Lowenstein Sandler LLP John K. Sherwood. Esq. Counsel for the Debtor Cooley LLP Richard S. Kanowitz, Esq. Counsel for the Official Committee of Unsecured Creditors Cole, Schotz, Meisel, Forman & Leonard, P.A, Michael D. Sirota, Esq. David M. Bass, Esq. Counsel for April Vreeland Associates, LLC
BANKRUPTCY JUDGE
NOT FOR PUBLICATION
LETTER OPINION
ORIGINAL FILED WITH THE CLERK OF THE COURT
Lowenstein Sandler LLP
John K. Sherwood. Esq.
Counsel for the Debtor
Cooley LLP
Richard S. Kanowitz, Esq.
Counsel for the Official
Committee of Unsecured Creditors
Cole, Schotz, Meisel, Forman & Leonard, P.A,
Michael D. Sirota, Esq.
David M. Bass, Esq.
Counsel for April Vreeland Associates, LLC
Dear Counsel:
The Court has signed and entered the parties' stipulation resolving many of the issues raised in relation to the Committee's motion to compel production of certain documents and communications involving the Debtor and related entities, including April Vreeland. As to the remaining question of whether the Committee, as an estate representative charged to bring certain causes of action, controls or shares the applicable privilege with the Debtor relating to those actions and could direct the Debtor, through waiver, to produce or share communications that would otherwise be protected from disclosure by privilege, the Court finds that the Committee does not.
This Court finds no authority, nor has it been presented with any, to support the Committee's position. While courts have recognized that a debtor's right to assert or waive the attorney-client privilege against discovery is passed to the estate or an appointed trustee upon filing for bankruptcy, or the subsequent appointment of a trustee, such a power does not extend to a creditors' committee that asserts causes of action on behalf of the estate. See Official Committee of Asbestos Claimants of G-I Holding. Inc. v. Heyman, 342 B.R 416 (S.D.N.Y. 2006). While it is true that any assets brought into the estate through causes of action brought by the Committee against insiders of the Debtor increases the value of the estate, actions by the Committee are taken as a fiduciary and representative for the creditor body, not the estate. For example, should the interests of the creditor body diverge from those of the debtor or the estate, the Committee would owe a duty to the creditors before the estate. Id. at 423. This is the fundamental difference between the role and fiduciary duty of a debtor-in-possession or trustee versus a creditors' committee and, thus, why the power to waive a privilege of a debtor is not extended to a creditors' committee. As such, the Committee does not control or share the attorney-client privilege asserted by the Debtor and cannot waive a privilege it does not enjoy.
Therefore, for the reasons set forth above, the motion to compel as it relates to the Debtor's production of documents subject to attorney-client privilege is denied and it is further ordered that the challenge period is not extended beyond May 2, 2013.
An Order in conformance with this Opinion has been entered by the Court and a copy attached hereto.
Very truly yours,
DONALD H. STECKROTH
UNITED STATES BANKRUPTCY JUDGE
Enclosure