Papers win bid for bankruptcy report

An investigative report compiled by a court-appointed bankruptcy examiner is a public record and must be made available to the news media, the 1st U.S. Circuit Court of Appeals ruled yesterday in Gitto v. Worcester Telegram & Gazette.

Two media organizations, the Worcester Telegram & Gazette Corp. and MediaNews Group Inc., sought release of the report. They prevailed in their request in both the bankruptcy court and the district court before the case reached the 1st Circuit.

The case arose after Gitto Global Corp., a Massachusetts plastics manufacturer, filed for Chapter 11 bankruptcy and the bankruptcy court appointed an examiner to investigate allegations of accounting irregularities.

Two former executives of the company argued that the resulting examiner’s report should be impounded under 11 U.S.C. section 107(b)(2), which provides an exception to public access for documents that contain material that is scandalous and defamatory.

But the 1st Circuit rejected their argument that any material tending to harm a person’s reputation triggers the exception. In so doing, the court affirmed that there is a long-standing common law presumption of public access to judicial records.

“To qualify for protection under the ยง 107(b)(2) exception for defamatory material,” the court said, “an interested party must show (1) that the material at issue would alter his reputation in the eyes of a reasonable person, and (2) that the material is untrue or that it is potentially untrue and irrelevant or included for an improper end.”

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