Many courts recognize that a corporation's constituent (such as an audit committee or a group of independent directors) can own the privilege and work product protection covering the constituent's internal corporate investigation. Under this approach, the company's bankruptcy trustee cannot access or waive that privilege or work product protection. See, e.g., Ex parte Smith, 942 So. 2d 356 (Ala. 2006) (denying a bankruptcy trustee's attempt to access pre-bankruptcy communications between the company's independent directors and its Skadden Arps lawyers).
In Krys v. Paul, Weiss, Rifkind, Wharton, & Garrison LLP (In re China Medical Technologies, Inc.), 539 B.R. 643 (S.D.N.Y. 2015), Judge Abrams dealt with privilege and work product protection covering an internal corporate investigation conducted by China Medical's Audit Committee lawyers at Paul Weiss. The court acknowledged "that the Audit Committee was 'independent' in some sense"— "[i]t could retain counsel, and it legitimately expected that its communications with counsel would be protected against intrusion by management." Id. at 655. But the court held that the company's bankruptcy changed the analysis — because depriving the bankruptcy liquidator of the privilege...
