Massachusetts Bankruptcy Court Refuses to Redact Court Transcript

Massachusetts Bankruptcy Court hearings are generally open to the public, Boston bankruptcy lawyers,debtors, creditors and occasionally the media. Transcripts of the proceedings are generally available as well. Some content is generally redacted, or excluded, such as “social security numbers, financial account numbers and minors’ names and birth dates.” In a May 2, 2011 decision by Bankruptcy Judge Henry J. Boroff, the Court was asked to look at the rules for allowing a portion of a public hearing to be redacted from the transcript of the bankruptcy court record.

In a Chapter 7 case that would not normally get this level of judicial attention, Verizon violated the rules of the Bankruptcy Court Automatic Stay. That is, after someone files for Chapter 7 bankruptcy protection, a creditor, such as Verizon, cannot continue to attempt to collect a debt from the debtor. All lawsuits are “stayed.” Creditors can file appropriate proceedings in the Bankruptcy Court, requesting a release from the automatic stay. This happens frequently in foreclosure cases, and sometimes in Massachusetts personal injury cases where insurance is involved.
In this case, Verizon violated the rule, numerous times, and continued to contact the debtor, over a $475.63 debt. They failed to stop contacting the debtor even after receiving a letter from debtor’s counsel. Wherefore, the bankruptcy debtor, through his Massachusetts bankruptcy lawyer filed a motion for monetary sanctions against Verizon. After numerous hearings and wrangling, Verizon and the debtor entered into an agreement: Verizon would pay sanctions for their transgressions, so long as the payment amount would be kept confidential. The parties then moved to dismiss the case. The Court, however, refused to follow the agreement without the disclosure of the amount, notwithstanding the confidentiality agreement. Verizon disclosed the monetary amount they would pay in court, and a transcript was made. On February 10, 2011, when the official “Notice of Transcript” was issued, Verizon moved to redact the portion of the transcript regarding the sanctions they paid.
In a well reasoned decision dated May 2, 2011, Judge Boroff noted that the law regarding Public Access to Bankruptcy Records and Exceptions, Section 107 of the Code, gives the right of public access as “entrenched in this country’s judicial system.”
The exceptions include a “trade secret or confidential research, development or commercial information” in subsection (b) and something that “would create undue risk of identity theft or other unlawful injury” in subsection (c). The Court pointed out that while stipulated dismissals are often used in Civil cases to ensure confidentiality, they cannot be used in the Bankruptcy Court context to circumvent the rules. The Court refused to accept Verizon’s argument, stating that the automatic stay “upon the filing of a bankruptcy case is one of the ‘cornerstones of bankruptcy law'” and that the facts in this case “contained serious allegations of Verizon’s repeated violations of the automatic stay.”
The Court declared Verizon’s motion a “backdoor attempt to seal the courtroom” and made it very clear that creditors that violate the automatic stay law will be sanctioned, and cannot simply pay undisclosed sums when they violate the law.
One lesson of this case is that consumers who file bankruptcies in Massachusetts should retain an aggressive Boston bankruptcy attorney because the creditors are often negligent and sometimes tenacious in pursuing debtors.