462 B.R. 42
Bankr. S.D.N.Y.2011Background
- Debtors hold ~10% of Kobo Inc. stock and are parties to the Shareholder Agreement governing Kobo's stock transfers and governance.
- Kobo's stock is subject to transfer restrictions, first-refusal rights, and participation rights under its organizational documents and the Shareholder Agreement.
- On November 8, 2011, a Share Purchase Agreement was executed involving a Purchaser, Rakuten as guarantor, Kobo insiders, and key management option-holders.
- SPA contemplates acquisition of all Kobo shares for about $315 million, subject to adjustments, with mutual releases and joinder rights for other Kobo shareholders.
- Debtors seek to file a redacted SPA (Exhibit B) with the Kobo Sale Motion to protect confidential commercial information, while ensuring material terms remain disclosed; they also seek approval of the Joinder Agreement to sell their Kobo interests for roughly $27.5–$32 million.
- The court held a hearing on December 6, 2011 and granted the motion to seal and redact the SPA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether redacted SPA sections qualify as commercial information under §107(b). | Debtors contend redactions protect commercial information. | Kobo/Purchaser argue information could harm competitive interests if disclosed. | Yes, redactions protect commercial information under §107(b). |
| Appropriate form of protection (redaction vs. wholesale sealing) to preserve confidentiality. | Public disclosures should be minimized; redaction suffices. | Complete sealing may be excessive; redaction is adequate to protect confidential terms. | Redaction is appropriate; material terms remain public and redacted portions shielded. |
Key Cases Cited
- Nixon v. Warner Commc'n, Inc., 435 U.S. 589 (U.S. 1978) (public access policy and First Amendment considerations for court records)
- Neal v. The Kansas City Star (In re Neal), 461 F.3d 1048 (8th Cir. 2006) (public access to court records; openness favored but exceptions exist)
- In re Orion Pictures Corp., 21 F.3d 24 (2d Cir. 1994) (definition of 'commercial information' and sealing standards; trade secrets not required)
- In re Food Mgmt. Grp., LLC, 359 B.R. 543 (Bankr.S.D.N.Y. 2007) (burden on movant to show information is confidential; open access policy with protective orders)
- In re Handy Andy Home Improvement Ctrs., Inc., 199 B.R. 376 (Bankr.N.D. Ill. 1996) (protective orders and scope of confidential information)
- Diamond State Ins. Co. v. Rebel Oil Co., Inc., 157 F.R.D. 691 (D. Nev. 1994) (definition of commercial information and protective orders)
- In re Itel Corp., 17 B.R. 942 (9th Cir. BAP 1982) (allocation of protective authority under §107(b))
- In re Barney's, Inc., 201 B.R. 703 (Bankr.S.D.N.Y. 1996) (needs-based analysis for protecting sensitive information)