By: Melissa Schneer
St. John's Law Student
American Bankruptcy Institute Law Review Staff
Recently, in Schleicher v. Wendt, a magistrate judge in Indiana held that a post-bankruptcy corporation that acquired substantially all of the pre-bankruptcy corporation’s business operations also acquired the pre-bankruptcy corporation’s right to assert the attorney-client privilege. Schleicher involved a class action against four senior executives of a company, based on that company’s decline into bankruptcy. The plaintiffs moved to compel the production of thousands of documents, which the defendants claimed were privileged. The parties disputed whether control of the pre-bankruptcy corporation (the “Old Corporation”) — accompanied by the attorney-client privilege — passed through bankruptcy proceedings to the post-bankruptcy corporation (the “New Corporation”). The court noted that the reorganized New Corporation did not obtain every aspect of the Old Corporation. The New Corporation, however, did acquire all of the Old Corporation’s assets, sources of revenue and expense, and management as part of the reorganization. As a result, the court opined that the New Corporation essentially gained control over the Old Corporation’s business operations. Consequently, the court held that the New Corporation acquired the Old Corporation’s right to assert the attorney-client privilege.