Delaware Bankruptcy Court Bars Ad Hoc Noteholder Group from Participating in Accuride Chapter 11 Proceedings Until the Group Complies with Rule 2019

On January 22, 2010, Judge Brendan L. Shannon, hearing In re Accuride Corporation, No. 09-13449 (Bankr. D. Del. January 22, 2010), issued an order compelling the Ad Hoc Noteholder Group in that matter to comply with Rule 2019(a).  Judge Shannon also prohibited further participation in these cases by the Ad Hoc Noteholder Group pending compliance, and directed the debtors in that case to withhold further payments to or on behalf of such group pending compliance.  Though Judge Shannon has not yet issued a memorandum explaining this decision, it would seem that he sides with Judge Mary F. Walrath, also of the Delaware Bankruptcy Court, who issued an opinion in the Washington Mutual Inc. Chapter 11 reorganization on December 2, 2009, likewise holding that Rule 2019 applies to the “ad hoc committees” of which hedge funds are often members.  See “As Debate over Amendment of Bankruptcy Rule 2019 Continues, Delaware Bankruptcy Court Finds that Current Rule 2019(a) Mandates Disclosure of Economic Interest of ‘Loose Affiliation’ of Washington Mutual Creditors,” Hedge Fund Law Report, Vol. 2, No. 49 (Dec. 10, 2009).  This article details the factual background of and the court’s legal analysis in the Accuride decision.

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