A federal bankruptcy trustee met yesterday with the staff of El Latino newspaper, the area's largest Spanish language weekly, to try to calm an internal dispute that threatened publication of the financially troubled paper this week.

El Latino, the most visible asset of the bankrupt Latin Investment Corp., was forced to cut its size from 18 to 12 pages Thursday when seven staff members walked out on publication day, the paper's editor said yesterday.

The seven were protesting the termination of an eighth employee, sales representative Johnny Yataco, who said he had demanded $5,000 in back pay before he left the building. Yataco said he was removed from the building by police and that this prompted the walkout.

Using a skeleton crew of four people, plus several community members who volunteered to help the beleaguered but popular community newspaper, El Latino made it to publication and hit the streets a few hours late yesterday.

Trustee Murray Drabkin, who was appointed to oversee Latin Investment's assets, unsuccessfully tried to mediate the dispute during a 90-minute meeting yesterday.

"I believe that it was a question about whether the employees were going to run the paper or whether management was going to run the paper," Drabkin said.

The employees who walked out resigned yesterday.

"They took the position that unless the publisher was eliminated, they would not go back to work," Drabkin said. Varsi Padayachee became publisher of El Latino in November 1989, two years after Latin Investment bought a 60 percent share of the publication's stock for $30,000.

Latin Investment offered banking services to Spanish-speaking immigrants with neither a federal charter nor federal deposit insurance.

When Latin Investment went bankrupt, it imperiled more than $6.8 million in savings that many immigrants had entrusted to the firm. Much of that money was invested in real estate, and more than $1.2 million is alleged to have been used for private purposes by Latin Investment's officers.

Drabkin views El Latino as one of the most liquid and potentially valuable assets to be sold in an effort to recover some of the depositors' money. The newspaper, which had a peak circulation of 30,000, published 10,000 copies yesterday.

Investors from New York began discussions with the owners about acquiring El Latino shortly after the fall of Latin Investment, but the sale was never completed.

"I view this newspaper as a significant asset," Drabkin said. "I'm going to do what I can to see that it remains alive and remains an asset."

Drabkin told the staff that accountants from Arthur Andersen & Co. would begin Monday studying El Latino's records to determine the financial condition of the newspaper.

That audit also should quell the internal debate underlying this week's walkout. The employees who left contend El Latino has accumulated nearly $300,000 in debt in the last year.

Padayachee said the estimate of the newspaper's debt is being exaggerated by the disgruntled employees. He estimates the debt is closer to $160,000.

Marta Cuellar, the newspaper's bookkeeper before she walked out, said several employees are owed nearly $30,000 in back wages.

Padayachee said that figure does not exceed $4,000.

Cuellar said the newspaper's long-distance telephone service was cut off because of unpaid bills, a delivery truck was repossessed and several other payments are lagging.

Carlos Caban, the newspaper's editor, who remained on the staff, confirmed that report.

The former employees said these problems began long before Latin Investment shut its doors Nov. 29 because of its financial problems.

But the closing did have an effect on El Latino. Fernando Leonzo, Latin Investment's president, had authorized his tellers to cash the paychecks of El Latino employees. After Latin Investment closed, employees had trouble cashing their checks elsewhere, the former employees and Caban said.