Heather Isringhausen Gvillo Dec. 2, 2014, 12:00pm

CHARLOTTE, N.C. (Legal Newsline) – Keeping up with the pattern of unsealing documents in the Garlock Sealing Technologies bankruptcy case, Bankruptcy Judge George Hodges has issued a final order allowing access to the Rule 2019 filings.

In Hodges’ Nov. 20 order in the U.S. Bankruptcy Court for the Western District of North Carolina, he vacated all previous orders regarding the Rule 2019 submissions, granting access for asbestos defendants.

Mimicking a hot potato game, the bankruptcy court has bounced back and forth between granting access and denying access to the filings. This order, however, vacates all previous orders on the subject, Hodges wrote.

According to the Federal Rule of Bankruptcy Procedure 2019, lawyers are required to make certain disclosures about clients’ claims against the bankrupt company, including prices paid for the debt and the date of acquisition.

Lawyers are not required to submit Rule 2019 Filings unless ordered by the court.

Several asbestos defendants and insurance companies sought access to the previously confidential information after Hodges Jan. 10 estimation ruling in favor of Garlock, in which he concluded that asbestos attorneys have been withholding evidence while pursuing claims against the debtor. As a result, he ordered the gasket manufacturer to put $125 million in its bankruptcy trust, which is roughly $1 billion less than what plaintiffs' attorneys requested as Garlock’s liability.

The dispute over Rule 2019 submissions began after Ford Motor Company filed a motion on March 14 seeking access to the documents. It was later joined by additional common asbestos defendants and insurance companies that believe they may have been victimized by the alleged withheld evidence, have fought for access to sealed information.  

On May 6, Hodges entered an order granting access to the submissions after he determined that the information was public record available for examination.

However, that order was stayed one day after access was approved and was later vacated on July 9. Instead, Hodges filed an amended 2019 access order in place of the original order.

The change of heart occurred after the Official Committee of Asbestos Personal Injury Claimants requested the stay in order to “preserve the ability of affected persons” to appeal.

The committee adds that the “court is already keenly aware” of the interests at stake for claimants and “the irreparable nature of the harm they may suffer should this court’s order not be stayed.”

After resolving the dispute and essentially granting public access to the entire estimation record, Hodges concluded that access is proper.

He explained that Ford provided appropriate notice of the its motion for access and that the Rule 2019 filings are public records.

However, Hodges held that the movants did not seek, and are therefore not entitled to access, any forms of agreement where the filing law firms were empowered to act on behalf of their clients.

Hodges further ordered the movants to destroy any 2019 retention agreements that may inadvertently be provided with the allowed information.

From Legal Newsline: Reach Heather Isringhausen Gvillo at asbestos@legalnewsline.com

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