New York – A U.S. bankruptcy court judge ordered hedge funds to disclose details of their holdings in Northwest Airlines, a ruling that may quell the enthusiasm of investor groups for banding together and exerting influence over bankrupt companies.
The judge, Allan Gropper, in New York on Friday denied a request by an unofficial equity committee in Northwest’s bankruptcy case that wanted to file disclosures about its members’ holdings under seal. He gave the funds until Wednesday to publicly state their stakes in Northwest, along with when and at what price they bought the securities.
“Any interest that individual committee members may have in keeping this information confidential is overridden,” Gropper wrote in his opinion. The argument for keeping trading strategies confidential had “no basis,” he said.
The committee, represented by the New York law firm Kasowitz Benson Torres & Friedman, argued at a hearing last week that forcing sophisticated investors to publicly disclose specific trade information may prevent them from getting involved in bankruptcies and hurt the secondary market for trading claims and equity. David Rosner, an attorney for the equity group, did not return a call seeking comment.
