IN RE: ZOHAR III CORP., et al.
- Summarized by David Banker , Womble Bond Dickinson
- 8 months 1 week ago
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- 23-2549 (3rd Circuit, Apr 23,2024) Not Published
- Tag(s):
-
- Ruling:
- OPINION NOT PRECEDENTIAL - Administrative expense claim struck because mediation communications in support of the administrative expense claim were not admissible. The parties had not waived the confidentiality protection over mediation communications (notwithstanding a settlement agreement - unrelated to the administrative expense claim request - that had referred the parties to mediation), nor was the claimant permitted to use the evidence in the interest of justice.
- Procedural context:
- Leave sought from the Bankruptcy Court for the District of Delaware to introduce evidence from mediation in connection with request for administrative expense claim The Bankruptcy Court reviewed the evidence and ordered the Debtors to file a motion to strike the relevant portions. The Bankruptcy Court granted the motion to strike and dismissed the claim without prejudice. The District Court affirmed. The claimant appealed to the Circuit Court, who affirmed the District Court.
- Facts:
- Patriarch Stakeholders filed an administrative expense claim in 2021 alleging that the Debtors failed to abide by their obligations under a settlement agreement to negotiate in good faith regarding certain "monetizations" of assets proposed by Lynn Tilton. Patriarch needed evidence to support its administrative expense claim, specifically, proposals made by parties to the settlement agreement during the mediation period, certain terms of those proposals, and what the parties did in response to those proposals. But a local bankruptcy rule in the District of Delaware provides that “the participants in any mediation are prohibited from divulging, outside of the mediation, any oral or written information disclosed by the parties or by witnesses in the course of the mediation."
- Judge(s):
- CHAGARES, Chief Judge, PORTER and SCIRICA, Circuit Judges
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