ESI Guidelines for the Bankruptcy Case: The ABA's Electronic Discovery in Bankruptcy Working Group Issues Interim Report
Although the Federal Rules of Civil Procedure were updated in 2006 specifically to deal with electronically stored information (“ESI”), Bankruptcy Courts and Bankruptcy practitioners have had little bankruptcy-specific guidelines for managing ESI and electronic discovery issues. As a result, the ABA commissioned the Electronic Discovery (ESI) in Bankruptcy Working Group “to study and prepare guidelines or a best practices report on the scope and timing of a party’s obligation to preserve [ESI] in bankruptcy cases.” On March 15, 2012, the Working Group published their interim report on ESI in bankruptcy cases in an effort to invite and stimulate comments from a wider audience regarding how ESI issues should be handled in (i) large Chapter 11 cases; (ii) middle market and smaller Chapter 11 cases; and (iii) Chapter 7 and Chapter 13 cases.
The Working Group’s primary focus has been on a Chapter 11 debtor-in-possession’s obligation to preserve ESI in connection with adversary proceedings, contested matters and the bankruptcy case itself, as well as the obligation of non-debtor parties to preserve ESI. Although the report differentiates between cases based on the size of the bankrupt entity and whether it has commenced a reorganization or liquidation proceeding, the principles espoused throughout the report are similar, with the differences primarily being focused on the economic constraints of each type of case.
The proposed standards, not surprisingly, contemplate that the duty to preserve ESI applies in the bankruptcy context. Tracking the traditional standards, the duty to preserve ESI arises when the lawsuit is filed or potential litigation matters become reasonably anticipated. Conversely, the actual or anticipated filing of a bankruptcy case would not, by itself, require a debtor to preserve every piece of information in its possession. Instead, it would, in general, be appropriate for the debtors to continue following routine document retention programs, consistent with the reasonable anticipation of contested matters and adversary proceedings.