The owners of the
won permission yesterday from a federal judge to consult the law firm Elliott Greenleaf & Siedzikowski, for advice on how an unauthorized tape-recording incident last November might impact the newspapers' pending bankruptcy case.
U. S. District Judge Eduardo C. Robreno upheld a ruling by U. S. Bankruptcy Judge Jean K. FitzSimon to have the recording incident investigated by a different set of lawyers, representing the newspapers' unsecured creditors.
That investigation is "ongoing and it is vigorous," said Gary M. Schildhorn, an attorney with Eckert Seamans Cherin and Mellott LLC, one of the firms responsible for the inquiry.
But Robreno reversed FitzSimon and allowed the company, Philadelphia Newspapers LLC, to hire the Elliot firm for advice on how the incident might affect the terms of the company's Chapter 11 reorganization plan, to be presented to creditors within days or weeks.
According to various accounts, newspaper executives were meeting privately with major creditors last Nov. 17, when Chief Executive Officer Brian Tierney noticed a recording device being used by Vincent DeVito, an executive with the CIT Group.
Tierney asked DeVito to stop the device, noting that Pennsylvania law prohibits the recording of conversations without the permission of all parties. DeVito complied. Subsequently, DeVito's firm advised Tierney that DeVito had recorded only that meeting and that the recording had been destroyed.
Tierney later testified that negotiations with creditors deteriorated after he made an issue of the incident. Several months later, on Feb. 22, the newspaper filed for bankruptcy protection.
Tierney has suggested that the recording incident could affect the CIT Group's standing in the bankruptcy case. *