Litigation Trust for the Trust Beneficiaries of SNTL Corp. v. JP Morgan Chase (In re Superior National Insurance Gr.)

MEMORANDUM OF OPINION DENYING DEFENDANTS’ MOTION TO COMPEL PRODUCTION OF DOCUMENTS (Docket # 160)

Defendants JP Morgan Chase Bank, N.A. and JP Morgan Chase & Co. *565 (“Chase”) move to compel the production of documents withheld by the Plaintiff, the Litigation Trust for the Trust Beneficiaries of SNTL Corporation and Certain Affiliates (the “Trust”).

Factual Background

SNTL Holdings Corp. (“SNTL”) and its non-insurance subsidiaries (collectively with SNTL, the “Debtors”) filed for chapter 11 relief on April 26, 2000 (# 00-bk-14099-GM). Also in 2000, SNTL’s five insurance subsidiaries were seized and placed into conservatorships by state agencies in California and New York.

The Debtors’ primary assets were over $1 billion of net operating loss carryfor-wards (“NOLs”). Chase held about $19 million of the Debtors’ senior debt. On June 21, 2002, the Debtors’ Second Amended Chapter 11 Joint Plan of Reorganization as amended (the “Plan”) was confirmed (BC Dkt. 709-1). The Plan was structured to realize value from the NOLs, and thus was shaped by the requirements of tax law. In essence, Chase acquired all equity in SNTL so that Chase could use the NOLs to offset its tax liability…