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

Rockaway, NJ |

If there special circumstances can it be filed uder seal?

Attorney Answers 3


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 the IRS. Outside of IRS matters, the posting attorney is licensed to practice law generally in the State of Texas and no other state. The information provided in this post is for general educational purposes only and should not be relied upon as legal advice by any party. No attorney-client relationship is formed with any party by the mere posting (or reading) of this information on the AVVO website. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency

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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 Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.

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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 information only and does not create an attorney client relationship between Lyasbeth Goodman and any other person. You should schedule a consultation with an attorney to discuss the specifics of your legal issues.

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