In In re Old BPSUSH Inc.,1 Judge Kevin Carey
of the Bankruptcy Court for the District of Delaware addressed a
developing area of the law related to the attorney-client and
work-product privileges and the transfer of any such privileges to
liquidation trustees in chapter 11 proceedings. The Bankruptcy
Court held that an audit committee’s privileges had
transferred to the liquidation trustee upon confirmation, and the
effective date, of the chapter 11 plan.
Background
Prior to the bankruptcy, the debtor-corporation’s
(Corporation) independent audit committee (Audit Committee) engaged
a law firm (Law Firm), among other professionals, in connection
with an internal investigation relating to “whether the
[Corporation’s] senior financial management could be relied
upon with respect to financial reporting and
certifications.”2 The Corporation
subsequently filed a chapter 11 petition and, ultimately, the
Bankruptcy Court confirmed a liquidation plan (Plan). The
