| The unique purpose and role of a special committee in Delaware corporate law has been exhaustively examined by courts. But far less explored are the questions of whether a special committee of the board of directors of a corporation is a separate entity from the corporation itself for purposes of privilege or other matters, and whether the debtor may access privileged special committee materials during or following bankruptcy. This issue has been litigated in court on only limited occasions despite the special committee’s prominent role, especially in fact patterns involving commercial fraud.
A recent opinion in In re GWG Holdings, Inc. from Judge Isgur in the U.S. Bankruptcy Court for the Southern District of Texas provides some additional clarity on the issue and solidifies growing consensus among courts that a special committee is not a separate entity. In addressing whether an arbitration provision contained in an engagement letter between a special committee and its counsel applied to the post-petition bankruptcy trustee of the corporation, Judge Isgur confirmed that the special committee was acting as an authorized agent of the corporation, and the trustee was therefore bound by the engagement letter’s arbitration provision. Judge Isgur held, in relevant part, that “[t]here is no authority for the proposition that GWG’s Special Committee was an entity separate from GWG. Delaware law confirms that a board of directors, and by extension a
special committee of the board, is the corporation’s authorized agent.”
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