Fall/Winter 2018 Page 7 creditor may file a claim in bankruptcy and wait as many as five to ten years to receive payment. To avoid such an outcome, an Official Com- mittee of Unsecured Creditors may be appointed by the Court. A Credi- tors’ Committee represented by well -qualified and experienced counsel can play a crucial role in maximiz- ing recovery for creditors. For exam- ple, Brown Rudnick represented the Unsecured Creditors Committee for Ironclad Performance Wear Corpo- ration. The bankruptcy case was filed on September 11, 2017, and by February 13, 2018, the Court ap- proved a joint plan of reorganization prepared by Brown Rudnick and debtor’s counsel re- sulting in a full recovery for unsecured credi- tors.7 As with the Fisker case discussed earli- er, the end result was the same — a signifi- cant recovery for unsecured creditors. Second, discovery is broader. In the inter- est of transparency, the rules for the discov- ery of information in bankruptcy proceedings are broad. For example, Bankruptcy Rule 2004 provides that “on the motion of any party in interest, the court may order the examination of any entity.”8 Indeed, the scope of Bankruptcy Rule 2004 is so broad that some courts have noted that it can be used to legitimately conduct a “fishing expedition.”9 Significantly, “because the purpose of a Rule 2004 investigation is to aid in the discovery of assets, any third party who can be shown to have a relationship with the debtor can be made subject to a Rule 2004 investigation.”10 (Continued from page 5) In contrast, under the Civil Rules, the applicable standard is that “[p]arties may obtain discovery regarding any nonprivileged matter that is rele- vant to any party’s claim or defense and propor- tional to the needs of the case . . . .”11 Thus, where the Civil Rules are designed for parties to the lawsuit to obtain relevant information, Bank- ruptcy Rule 2004 may be used more broadly by any party in interest to obtain information from any entity that has a relationship with the debtor. One caveat to this rule is that discovery in two types of bankruptcy proceedings — adversary proceedings (essentially civil litigation proceedings before the bankruptcy court) and contested mat- ters (motions or other matters which are opposed) — are often governed by the Civil Rules rather than Bankruptcy Rule 2004. Third, appeals may be moot. Bankruptcy ap- peals are significantly different from ordinary federal appeals. As a preliminary matter, certain determinations of a Bankruptcy Court are not reversible on appeal. To preserve finality and to encourage investments in distressed companies without fear that such investments will be upset years down the road, the bankruptcy code statu- torily prohibits the reversal of certain “moot” is- sues. For example, Bankruptcy Code Section 363(m) provides that the appellate court’s reversal of an order approving an unstayed, good faith sale or lease of property will not affect the validity of the transaction.12 Similarly, Bankruptcy Code Sec- tion 364(e) provides that the protections provided to certain infusions of credit to a debtor in bank- ruptcy are unaffected by reversal on appeal.13 Bankruptcy Code Section 1127(b) prohibits the modification of a plan of reorganization after the plan has been “substantially consummated,” (Continued on page 16) Bankruptcy Basics “[T]he scope of Bankruptcy Rule 2004 is so broad that some courts have noted that it can be used to legitimately conduct a ‘fishing expedition.’”