The Chapter 7 Trustee filed a motion to seal in which he sought to be authorized to file under seal several motions, including (1) a motion to employ a law firm as counsel to the Trustee for investigating and collecting assets of the Debtors’ bankruptcy estate; (2) a secret motion to approve, on an interim basis, a funding agreement between the Trustee and certain creditors of the estate, pursuant to which one of the creditors agreed to guarantee payment of the Trustee’s legal costs; and (3) a motion seeking authorization for the Trustee to conduct covert discovery by issuing subpoenas to unidentified third-party banks in New York without notice. The Trustee requested permission to file the motions under seal because he believed that the strategy of the creditor who had agreed to fund the Trustee’s legal costs would be compromised if the debtors learned of the law firm’s investigation and collection efforts before such efforts were officially executed.
The Court denied the motion, finding that the proposed secret employment and discovery process was contrary with the concept of public access to judicial documents and not authorized by 11 U.S.C. § 107(b), Fed. R. Bankr. P. 9018, or 11 U.S.C. § 105(a). Further, the Court found that the secret discovery process proposed by the Trustee failed to comport with the procedural notice requirements of Fed. R. Bankr. P. 2004 and 9016, which incorporate Fed. R. Bankr. P. 45. Accordingly, the Court denied the Trustee’s motion to seal.