Bank May Not Hide Settlement Amount

Posted by NCBRC - February 21, 2018

The amount of a settlement was not “confidential commercial information” requiring that it be sealed by the bankruptcy court. In re Gibbs, No. 11-3070 (Bankr. D. Haw. Dec. 19, 2017).

Judith Lynn Gibbs’s bankruptcy estate included a claim against Bank of America for wrongful foreclosure. The Bank and the bankruptcy trustee reached a settlement and jointly sought an order to seal the settlement agreement and redact the settlement amount from any other court records. The Office of the U.S. Trustee opposed the motion.

Section 107(b)(1) stands as an exception to the general rule that bankruptcy filings are a matter of public record. That section provides: “On request of a party in interest, the bankruptcy court shall . . . protect an entity with respect to  . . . commercial information.” The Bank argued that the court should grant the motion both because the parties had agreed to treat the settlement with confidentiality and because sealing the record as to the amount of the settlement would protect the Bank’s commercial information.

The court made quick work of the first argument, finding that section 107(b) does not permit a court to seal a record merely because the parties have agreed to it. As to whether sealing the record was necessary to protect the Bank’s commercial information, the court was likewise unconvinced. Though the Bank argued that revealing the settlement amount would give its competitors an unfair advantage with respect to the Bank’s settlement strategy, it offered no evidence to support its claim. Rather, the court found that the evidence revealed that the Bank’s real concern was that future plaintiffs in similar wrongful foreclosure cases against it would be able to leverage the information to their advantage. The court found that this was not a proper justification for “impinging on the public’s right of access to judicial documents.”

Gibbs Bankr D. Haw opinion Dec 2017


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