Can a False Claims Act be filed as an adversary proceeding if it relates to an active Chapter 11 Bankruptcy Case?

Asked about 3 years ago - Rockaway, NJ

If there special circumstances can it be filed uder seal?

Attorney answers (3)

  1. Benjamin A. Stolz


    Contributor Level 10


    Best Answer
    chosen by asker

    Answered . Sealing documents in Bankruptcy Court is possible.

    Section 107 of the Bankruptcy Code provides:

    (a) Except as provided in subsection (b) of this section,a paper filed in a case under this title and the dockets of a bankruptcy court are public records and open to examination by an entity at reasonable times without charge.

    (b) On request of a party in interest, the bankruptcy court shall, and on the bankruptcy court's own motion, the bankruptcy court may–

    (1) protect an entity with respect to a trade secret or confidential research, development, or commercial information; or

    (2) protect a person with respect to scandalous or defamatory matter contained in a paper filed in a case under this title.

    Section 107 is supplemented by Fed. R. Bankr. P. 9018, which provides:

    On motion or on its own initiative, with or without notice, the court may make any order which justice requires (1) to protect the estate or any entity in respect of a trade secret or other confidential research, development, or commercial information, (2) to protect any entity against scandalous or defamatory matter contained in any paper filed in a case under the Code, or (3) to protect governmental matters that are made confidential by statute or regulation. If an order is entered under this rule without notice, any entity affected thereby may move to vacate or modify the order, and after a hearing on notice the court shall determine the motion.

    In order to seal documents, the court must find that they contain confidential “commercial information.” Several courts have defined confidential “commercial information” as information that would provide an “unfair advantage” to competitors. See In re Itel Corp., 17 B.R. 942, 944 (9th Cir. BAP 1982); In re 4 Orion Pictures Corp., 21 F.3d 24, 27 (2d Cir. 1994).

    Hope this helps.

    The posting attorney is admitted to the U.S. Tax Court and authorized to represent clients in all 50 states before... more
  2. Theodore Lyons Araujo


    Contributor Level 20

    Answered . You would probably have to succeed in the adversary so you could file the FCA claim. Why would it have to be filed under seal? It's possible, but highly unlikely.

    Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and... more
  3. Lysbeth Goodman


    Contributor Level 14

    Answered . You probably could file an adversary proceeding. Look at Bankruptcy Rule 7001 to see what kind of actions are required or allowed to be filed as an adversary proceeding.

    I seem to recall some judge telling another lawyer in court one day that you cannot just file documents under seal. You have to make an application and get an order allowing the sealed filing.

    Lysbeth Goodman is an attorney licensed in the state and federal courts of California. This answer is for general... more

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