Philadelphia Newspapers to release reorganization plan

Philadelphia Newspapers L.L.C. expects to make public a reorganization plan before the end of next week, a lawyer for the company told a federal bankruptcy judge yesterday.

Peter J. Young, of Proskauer Rose L.L.P., told U.S. Bankruptcy Judge Jean K. FitzSimon that the company, which owns The Inquirer, the Philadelphia Daily News and Philly.com, was still going over details of the plan with investors.

Before the plan is presented to the court, Young said, it will be circulated among the creditors.

The court had given the company until Aug. 31 to present its plan. Company officials declined to discuss specifics of the plan yesterday. Previously, they said it involved raising $50 million in new capital and negotiating with lenders to reduce the company's $300 million debt.

Representatives for creditors said yesterday that they had not been advised of the company plan as of yet.

In a related matter, Philadelphia Newspapers has filed a motion asking FitzSimon to reconsider her order blocking the company from conducting its own investigation of an unauthorized taping of a meeting by a key lender.

FitzSimon had ruled that the investigation would be handled by a committee of unsecured creditors in the case.

In its motion, the company said that the committee had mishandled the investigation, failing, for instance, to depose witnesses under oath and to seek a broad array of internal documents relating to how the creditors responded to the taping incident.

The company wants its own attorney, John M. Elliott, of Elliott Greenleaf & Siedzikowski, to investigate the matter.

Gary M. Schildhorn, a lawyer with Eckert, Seamans, Cherin & Mellott L.L.C., the firm handling the investigation for the lenders' committee, said in an interview yesterday that his firm had conducted a "professional and competent" inquiry.

"It appears that no investigation except for one conducted by Elliott Greenleaf will satisfy the debtor," Schildhorn said.

The investigation stems from a Nov. 17 meeting between the company and its senior lenders. Vincent DeVito, an executive with CIT, one of the paper's major lenders, was found to be taping the meeting without permission of all those in the room.