,
Rick Hyman ,
Jeffrey G. Tougas ,
Amit K. Trehan and
Barbara Yan 
Originally published December 15, 2008
Keywords: Delaware, bankruptcy court, DIP lender, fee letters, under seal, Bankruptcy Code, Tribune Company,
Certain fee letters associated with a postpetition financing can be submitted under seal under Section 107(b) of Title 11 of the United States Code (the "Bankruptcy Code") according to the United States Bankruptcy Court for the District of Delaware, which noted that the information in such fee letters constituted "confidential . . . commercial information."
On December 8, 2008, Tribune Company and certain of its affiliates (collectively, "Tribune") filed voluntary petitions for relief under the Bankruptcy Code. As part of its first day motions, Tribune filed a joint motion with its proposed debtor-in-possession (DIP) lender to file under seal certain fee letters associated with the DIP lender-led postpetition financing.
Mayer Brown, representing the DIP lender, argued that the public disclosure of such confidential and proprietary information had the potential to harm the lender's business, impair its ability to syndicate such facilities in the future, and cause it to consider exiting this specialized marketplace. Upon an evidentiary hearing involving a proffer of testimony and cross-examination of a witness from the DIP lender, the Honorable Judge Kevin J. Carey approved the joint motion to seal certain fee letters associated with the financing. Given the highly complex nature of the transaction, and the fact that the calculation of fees for the postpetition financing involved a proprietary methodology developed by the DIP lender, the court ruled that the debtors and the DIP lender satisfied the "confidential commercial information" requirement of Section 107(b) of the Bankruptcy Code.
The ruling is instructional for lenders who seek to provide postpetition financing to debtors but do not want to disclose the fees associated therewith. The fees associated with postpetition financing are often negotiated extensively and involve the knowledge of a team of restructuring, finance, capital markets, and legal experts. The court's ruling is likely to encourage more lenders to consider providing debtors with bankruptcy financing, which is in increasing demand given current, and projected, economic conditions.
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