Rapid-American Corporation

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re: 	:
: 	Chapter 11
RAPID-AMERICAN CORP., 	: 	Case No.: 13-10687
:
Debtor. 	:
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ORDER DENYING EX PARTE MOTION TO FILE UNDER SEAL
PORTIONS OF ITS MOTION TO SELL ITS MIDLAND CLAIMS
The debtor seeks to sell two claims pursuant to 11 U.S.C. § 363(b) and (f) that
have been allowed in the aggregate amount of $10 million in the liquidation proceedings
of Midland Insurance Company. The debtor has filed an ex parte motion to file portions
of its sale motion as well as the entire sale agreement and annexed exhibits under seal,
(see Ex Parte Motion of the Debtor Pursuant to 11 U.S.C. §§ 107(b) and 105(a) and Fed.
R. Bankr. P. 9018 for Authority to (I) File Documents Under Seal and (II) Redact
Commercially Sensitive, Nonpublic Information, Dec. 13, 2017 (ECF Doc. # 926)),
notwithstanding that certain of the annexed exhibits are already filed on the Court’s
docket and/or are patently non-confidential. According to the sealing motion, the
information is confidential because the debtor and the purchaser, presumably at the
latter’s assistance, “have agreed that keeping the name of the Purchaser, the terms of the
sale, specifically, the purchase price, confidential, are necessary to maintain the value of
the transaction.” (Id. at ¶ 14.)
There is a strong presumption and public policy in favor of public access to court
records, see, e.g., Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 597–98 (1978); United
States v. Amodeo, 71 F.3d 1044, 1048 (2d. Cir.1995), “rooted in the public’s First
Amendment right to know about the administration of justice.” Video Software Dealers
Ass'n v. Orion Pictures Corp. (In re Orion Pictures Corp.), 21 F.3d 24, 26 (2d Cir.1994)
(stating that public access “helps safeguard ‘the integrity, quality, and respect in our
judicial system,’ and permits the public ‘to keep a watchful eye on the workings of public
agencies' ” (internal citations omitted)). Bankruptcy Code § 107(a), which states that any
paper filed in a case is a public record and open to examination, reinforces the general
presumption in favor of public filing. Geltzer v. Andersen Worldwide, S.C., No. 05 Civ.
3339(GEL), 2007 WL 273526 at *3 (S.D.N.Y. Jan. 30, 2007) (Lynch, J.).
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Section 107(b) contains an exception to public disclosure to protect, inter alia,
“commercial information.” “Commercial information has been defined as information
which would cause ‘an unfair advantage to competitors by providing them information
as to the commercial operations of the debtor.’” Orion Pictures Corp., 21 F.3d at 27
(quoting Ad Hoc Protective Comm. for 10 1/2% Debenture Holders v. Itel Corp. (In re
Itel Corp.), 17 B.R. 942, 944 (9th Cir. BAP 1982)). The exception is narrow, and “a judge
must carefully and skeptically review sealing requests to insure that there really is an
extraordinary circumstance or compelling need.” Id. The moving party bears the
burden of demonstrating that the information it is seeking to protect from public
viewing is both commercial and confidential. In re Oldco M Corp., 466 B.R. 234, 237
(Bankr.S.D.N.Y.2012); In re Northwest Airlines Corp., 363 B.R. 704, 706
(Bankr.S.D.N.Y.2007).
The debtor has failed to sustain its burden. In a sense, all information relating to a
commercial transaction is “commercial information.” Moreover, the parties insist on
confidentiality. Nevertheless, “[t]he ‘commercial information’ exception is not intended
to offer a safe harbor for those who crave privacy or secrecy for its own sake. Instead, it
protects parties from the release of information that could cause them harm or give
competitors an unfair advantage.” Gowan v. Westford Asset Mgmt. LLC (In re Dreier
LLP), 485 B.R. 821, 823-24 (Bankr. S.D.N.Y. 2013); accord Togut v. Deutsche AG (In re
Anthracite Capital, Inc.), 492 B.R. 162, 178 (Bankr. S.D.N.Y. 2013). The debtor has not
even made the effort to show that the disclosure of the redacted information will harm
either party or place either party at a competitive disadvantage. Even if such evidence
existed, the concern could be overcome simply by redacting the name of the purchaser
while including other relevant information, specifically, the sale price. Moreover, the
proposed sale is to be private although the evidence submitted by the debtor shows that
other parties were interested in purchasing the claim. At a minimum, those other
parties should receive notice of the proposed sale and offered an opportunity
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to outbid the proposed purchaser.
Accordingly, the ex parte motion to file portions of the sale motion and
accompanying documents under seal is denied.
So ordered.
Dated: New York, New York
December 15, 2017
/s/ Stuart M. Bernstein
STUART M. BERNSTEIN
United States Bankruptcy Judge
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