Where is the valuation report? I would like to see that before I sell my stock...
This policy of open inspection, codified generally in §107(a) of the Bankruptcy Code, evidences Congress’s strong desire to preserve the public’s right of access to judicial records in bankruptcy proceedings. See Orion, 21 F.3d at 26. Section 107(a) of the Code provides that all papers filed in the case and the dockets of a bankruptcy court “are public records and open to examination by an entity at reasonable times without charge.” 11 U.S.C. §107(a). The legislative history of §107(a) confirms Congress’s general intent to keep access to judicial records open. Senate Report No. 989 states that §107(a) “makes all papers filed in a bankruptcy case and the dockets of the bankruptcy court public and open to examination at reasonable times without charge.” S. Rep. No. 989, 95th Cong., 2d Sess. 30, reprinted in 1978 U.S.C.C.A.N. 5787, 5816.
Moreover, on a purely practical level, the sealing of court records inflicts a costly nuisance on the judicial system. See City of Hartford v. Chase, 942 F.2d 130, 137 (2d Cir. 1991) (Pratt, J., concurring). Mechanical and logistical problems of sealing the files, finding extra space in the vault, satisfying handling requirements, plus the related direct and indirect costs, impose substantial burdens on the clerk’s office and on a judge’s staff. All these factors argue strongly for open access to court records in the bankruptcy court. See id.
In the case of In re Orion Pictures Corp., 21 F.3d 24, 27 (2d Cir. 1994), the Second Circuit explained that “n most cases, a judge must carefully and skeptically review sealing requests to insure that there really is an extraordinary circumstance or compelling need.” Moreover, the Second Circuit emphasized that, “it is a basic tenet of our jurisprudence that court records are public and “open to examination by an entity at reasonable times without charge.” 11 U.S.C. §107(a); see, e.g., Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110 (2d Cir. 2006), (discussing Constitutional and common law rights of access to documents filed in court).
In Orion, the debtor sought to seal certain specific confidential commercial information consisting of the terms of a promotional agreement between the debtor and a major customer that the court determined would give competitors, who sought to make the information public a direct competitive advantage. The Second Circuit held that, under §107(b), protection is available if an interested party could demonstrate “that the information it sought to seal was ‘confidential’ and ‘commercial’ in nature.” Id. Of course, most would agree that the sealing of a single agreement with the debtor’s major customer is completely appropriate.
The Second Circuit held in Orion that §107(b) created a narrow exception to the general rule. Moreover, in Orion, the Second Circuit narrowly defined the term “commercial,” as used in section 107(b), as “information which would cause ‘an unfair advantage to competitors by providing them information as to the commercial operations of the debtor.’” 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 (B.A.P. 9th Cir. 1982)).
'Courts of bankruptcy are essentially courts of equity, and their proceedings inherently are proceedings in equity.'
