As reported last week, the Bankruptcy Court in the Northwest Airlines Chapter 11 bankruptcy case ordered the Ad Hoc Committee of Equity Security Holders to make public detailed information about the claims and stock they own and the amounts they paid for them. For those who missed it, here’s the Bankruptcy Court’s first decision on the Rule 2019 disclosure issue back on February 26, 2007. If you want the full story on the hedge fund disclosure issue, check out these two earlier posts, which you can find here and here.
Ad Hoc Committee Discloses Trades. After failing to persuade the Bankruptcy Court to reconsider its decision or to allow the disclosure to be filed under seal, a noticeably smaller Ad Hoc Committee filed this Rule 2019 disclosure on Wednesday, March 21, 2007, providing details on the amounts of claims or stock held, the dates purchased, and the amounts paid. The Ad Hoc Committee’s membership appears to have been reduced by at least four, currently standing at nine, although the Rule 2019 statement does not explain the change in membership or include any disclosure by the former members.
Although Smaller, Ad Hoc Committee Is Still Intact. The filing answers at least one question — whether the hedge funds involved would decide to disband the ad hoc committee to avoid disclosing their trading information. While four dropped out, it seems that the nine remaining Ad Hoc Committee members concluded that the benefits of collective action outweighed the burdens of making the required disclosure.
Appeal Status Unclear. The Ad Hoc Committee had previously filed a notice of appeal from the Bankruptcy Court’s decision, seeking review by the United States District Court for the Southern District of New York. With the disclosure actually filed, it’s not clear whether the Ad Hoc Committee plans to drop the appeal and an accompanying motion for leave to appeal, which it had originally filed in the Bankruptcy Court, and whether the appeal would be moot if continued. Should the Ad Hoc Committee or its former members pursue the appeal effort, I’ll post updates as developments warrant.