For Whom the Bell Tolls: Obligations and Risks of Third-party Witnesses under Rule 2004 Examinations.
November 27, 2016
Authored by: James Maloney
Two recent Bankruptcy Court cases both remind and illustrate the power and risks presented by discovery of facts and documents under Bankruptcy Rule 2004, showing that it can compel third parties to provide information to support later litigation against them or cause them to lose their 5th Amendment right against self-incrimination.
- In re Great Lakes Comnet, Inc./ (a copy of the case is here: great-lakes-comnet-inc), the Bankruptcy Court for the Western District of Michigan held that the Committee of Unsecured Creditors was entitled to conduct a Rule 2004 examination of a third-party company while explicitly recognizing that the intent of the examination was to prepare for and inform the committee regarding later litigation against the third-party.
- In re Mavashev/ (a copy of the case is here: in-re-mavashev), the Bankruptcy Court for the Eastern District of New York held that a third-party witness would not be prejudiced by any self-incrimination in the act of producing a document central to what was very likely a criminal transaction in association with the debtor, and further that such witness had waived his privilege against self-incrimination by prior, limited testimony in the Rule 2004 examination.
Discovery of facts