By: E&P Staff A federal judge overseeing the bankruptcy proceedings for Philadelphia Newspapers LLC ordered lawyers for the company's creditors to share details of their investigation into an alleged unauthorized recording of a meeting with the company's lenders.
"I'm not happy with anybody here today," U.S. Bankruptcy Judge Jean K. FitzSimon said Tuesday, according to The Philadelphia Inquirer. FitzSimon, who ordered an investigation into the taping by the committee representing unsecured creditors in April, criticized the committee yesterday for "play[ing] a little bit cute on this investigation." But she also criticized lawyers for Philadelphia Newspapers -- which oversees the Inquirer, the Philadelphia Daily News, and the Web site Philly.com -- for not coming to her earlier to request greater involvement in the investigation.
The dispute arose when Vincent DeVito, an executive with CIT, one of the company's primary creditors, was found to be taping a Nov. 17, 2008 meeting at the offices of Philadelphia Newspapers. Originally, FitzSimon denied the company's request to hire its own counsel to investigate the taping, and ordered the Committee of Unsecured Creditors to investigate instead.
In papers filed in FitzSimon's court last Friday, lawyers for Philadelphia Newspapers claimed that the committee has a conflict of interest that would affect how aggressively it would pursue the investigation. The paper claimed that the secured lenders, including CIT, had initiated discussion with unsecured lenders about a reorganization plan for Philadelphia Newspapers. "It is not a stretch to surmise that the Committee's decision ... to otherwise freeze the Debtors out of the investigation was driven by its desire to curry favor with the Senior Secure Lenders," said the filing, according to the Inquirer.
If CIT -- or any of the secured lenders -- is found to have committed wrongdoing, it risks losing its place in the order of repayment.
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