Newspaper firm seeks approval on inquiry

Inquirer's owner filed for court's OK to hire counsel to investigate recording of a meeting.

Posted: March 04, 2009

Philadelphia Newspapers L.L.C. has asked a U.S. bankruptcy court for permission to hire special counsel to investigate what it described as the "unauthorized recording" of a confidential meeting between the company and its senior lenders, according to a filing Friday.

The document filed by the owner of The Inquirer, the Philadelphia Daily News and Philly.com did not identify the party that allegedly made the recording.

Brian P. Tierney, chief executive of Philadelphia Newspapers, found a digital voice recorder under some papers on a table where the company met with creditors, two sources who spoke on the condition of anonymity said yesterday.

The meeting took place in November at the company's headquarters on North Broad Street, the sources said.

Tierney declined to comment.

Sylvia T. Bronner, spokeswoman for Citizens Bank, which led the group of lenders that in 2006 provided most of the money for the $515 million purchase of the Philadelphia newspapers by Tierney and other local investors, said she had no comment.

Citizens continues to manage the senior debt for the current creditors, many of whom have bought the debt at a steep discount on the secondary market.

In Pennsylvania, it is illegal to secretly record a conversation. "Whether on the phone or in person, it requires consent of all parties," said Henry E. Hockeimer Jr., a partner at Philadelphia law firm Ballard, Spahr, Andrews & Ingersoll L.L.P., who is not involved in the case.

Philadelphia Newspapers filed Feb. 22 for bankruptcy protection after failing in 11 months of negotiations to reach a deal with its lenders on debt relief.

In the motion filed Friday, the company asked Bankruptcy Judge Jean K. FitzSimon for permission to retain the Blue Bell law firm of Elliott Greenleaf & Siedzikowski P.C. to investigate "the unauthorized recording of confidential pre-petition meeting(s) between the debtors and their senior secured lenders."

Mark J. Schwemler, the Elliott Greenleaf attorney who filed an affidavit in support of the firm's retention, did not return a phone call.

The firm's chairman and senior shareholder, John M. Elliott, also did not return a call seeking comment. Elliott represented Tierney in a dispute with Advanta Corp. over Tierney's 2005 departure from the Springfield, Montgomery County, credit-card company.

An important hearing in the Philadelphia Newspapers bankruptcy is scheduled for Monday. That is when FitzSimon will hear arguments on which financing the company will use during bankruptcy.

The senior lenders have opposed the "debtor-in-possession" financing proposed by the company, in part because it would automatically go into default if Tierney left the company.


Contact staff writer Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.

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