Lawyers for The Washington Post and The New York Times yesterday asked a federal judge to reconsider a court order sealing the names of financial institutions that lent money to bankrupt real estate partnerships established by the Equity Programs Investment Corp. (EPIC).
The motion filed in bankruptcy court in Alexandria contended that the protective order contravened provisions of the federal bankruptcy code permitting "public access to court records except in certain narrowly defined circumstances."
The court records placed under seal yesterday by Judge Martin V. B. Bostetter were part of financial information filed earlier this week by more than 350 real estate investment partnerships established by EPIC, a subsidiary of the troubled Community Savings & Loan in Bethesda. Bostetter specifically sealed the names of institutions holding EPIC mortgages and mortgage-backed securities.
EPIC's default on payments of more than $1 billion worth of mortgage obligations triggered the current problems at Community Savings & Loan, which has been placed under conservatorship by the state of Maryland.
Lawyers for two banks serving as trustees for most of the institutions holding EPIC mortgage debt had asked for the order on Thursday. The filings had been temporarily sealed Wednesday in a closed hearing in Bostetter's chambers.
The trustees contended in a motion asking for the order that disclosure of the creditors names could cause depositors to lose confidence in institutions found to have lent EPIC partnerships money, even though the institutions may be in good financial health. The disclosure could also hinder efforts under way to develop a reorganization plan for the partnerships, the trustees' lawyers argued.
In seeking to reverse Bostetter's decision, however, lawyers for The Post and The Times argued that much of the sealed information is subject to circulation through much of the local financial community, though not the public at large.
"Permitting the public to monitor these proceedings serves important societal goals, including the promotion of public trust in the administration of justice -- goals which underlie the statutory and common law rights of public access," the lawyers argued.