652 B.R. 618
Bankr. S.D.N.Y.2023Background
- Debtors (Genesis entities) operate a crypto lending/trading business and filed Chapter 11 on Jan. 19, 2023; they market their business and assert the list of lenders/customers is a saleable asset.
- Debtors, the Official Committee of Unsecured Creditors, and an Ad Hoc lender group moved to redact personally identifiable information (names, addresses, emails) of the Debtors’ lenders from court filings under 11 U.S.C. §§ 107(b) and 107(c).
- The U.S. Trustee opposed broad redactions, consenting only to redaction of individual email and mailing addresses but objecting to redacting lender names and institutional creditor information.
- Evidence (testimony and declarations) established that the lender list is commercially valuable and sold as part of the Debtors’ assets, and that disclosure risks phishing, identity theft, and even physical threats to high‑net‑worth crypto holders.
- The Court held evidentiary hearings, found the Movants’ evidence largely unrebutted, and concluded that §107(b) protects the lender list as confidential commercial information and §107(c) protects Individual Lenders from undue risk of identity theft or other unlawful injury.
- The Court granted the redactions in full except that §107(c) protections do not extend to business entities (institutional creditors) as such; the Court required minimal, tailored redactions and preservation of unredacted copies for specified parties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether lender names/contact information are "confidential commercial information" under §107(b) | Movants: lender list is a saleable customer asset; public disclosure would let competitors poach customers and depress sale value | UST: Movants failed to show names are commercial secrets or that disclosure would suppress estate value | Court: Granted — lender names/contacts are confidential commercial information under §107(b) and may be redacted |
| Whether Individual Lenders are entitled to protection under §107(c) (undue risk of identity theft/unlawful injury) | Movants: disclosure creates undue risk (phishing, SIM‑swap, theft, physical harm), especially for high‑net‑worth crypto holders | UST: Risk is generalized; no specific threats shown; public interest favors disclosure | Court: Granted — Individual Lenders' names, addresses, and emails may be redacted under §107(c) given demonstrated risk |
| Whether §107(c) covers institutional creditors or employees of institutions | Movants: risks apply equally to individuals associated with institutions; their names should be protected | UST: §107(c) applies to individuals only; institutions not covered | Court: Denied as to business entities — §107(c) protects only individuals; institutional names not covered by §107(c) (but may be protected under §107(b)) |
| Scope and minimization of redactions and access to unredacted materials | Movants: broad redaction necessary; unredacted copies provided to UST/committee/purchaser under confidentiality | UST: public access must be preserved; redactions should be minimal and verified | Court: Requires narrowly tailored redactions, use of placeholders where possible, and provision of unredacted materials to specified parties under confidentiality; preserves right to seek unsealing when necessary |
Key Cases Cited
- Video Software Dealers Ass'n v. Orion Pictures Corp., 21 F.3d 24 (2d Cir. 1994) (establishes public‑access presumption and §107(b) framework)
- In re Food Mgmt. Grp., LLC, 359 B.R. 543 (Bankr. S.D.N.Y. 2007) (public access presumption in bankruptcy; burden on movant to justify sealing)
- Togut v. Deutsche Bank AG (In re Anthracite Capital, Inc.), 492 B.R. 162 (Bankr. S.D.N.Y. 2013) (sealing requires clear evidence; discretion discussed)
- In re Borders Grp., Inc., 462 B.R. 42 (Bankr. S.D.N.Y. 2011) (commercial‑information protection may extend to information that would chill negotiations)
- Motors Liquidation Co. v. JPMorgan Chase Bank, N.A. (In re Motors Liquidation Co.), 561 B.R. 36 (Bankr. S.D.N.Y. 2016) (preference for redaction over wholesale sealing; make public as much as possible)
- In re Celsius Network LLC, 644 B.R. 276 (Bankr. S.D.N.Y. 2022) (discussed in comparing factual records on §107(c) risk of disclosure)
- In re Faucett, 438 B.R. 564 (Bankr. W.D. Tex. 2010) (customer‑identity information can be confidential commercial information)
- In re Nunn, 49 B.R. 963 (Bankr. E.D. Va. 1985) (customer list recognized as protectable asset)