Byline: Jeff Siegel

NEW YORK--The confidential report reviewing The Leslie Fay Cos.' internal investigation into the accounting scandal that forced the company into Chapter 11 could be unsealed today.
The unsealing of the two-part report, which also examines the role played by Weil Gotshal & Manges, counsel to Leslie Fay and a participant in its internal probe, will be addressed by all parties in a chambers conference with Bankruptcy Judge Tina L. Brozman scheduled for 5 p.m. today.
The report by court-appointed examiner Charles Stillman has been sealed since it was filed with the court May 27.
A source close to the probe, who spoke on the condition of anonymity, said Friday there is a "growing desire" on the part of most of the parties involved to have the report made public.
Officials from Leslie Fay and its creditors' groups met last month with Brozman to discuss the unsealing of the report, but the parties agreed to keep it sealed for at least another 30 days.
Only one party, Weil Gotshal & Manges, filed papers related to the unsealing of the report. That filing, too, is sealed.
The report, the source said, is critical of Weil Gotshal and its involvement with Leslie Fay before the company filed for Chapter 11 in April 1993. Dennis Block at Weil Gotshal said his firm had no comment.
Leslie Fay asked the court to appoint an independent examiner to quell any doubt over the initial report on the accounting irregularities made by Arthur Andersen & Co. That report, which was also not made public, cleared "top management" of any wrongdoing, according to the company. The only actions taken were the dismissal of Paul F. Polishan as chief financial officer and Donald F. Kenia as corporate controller. In addition, John J. Pomerantz, chairman and chief executive officer, was relieved of all financial responsibilities.
As reported, Leslie Fay overstated its profits by $81 million over three years through 1992.
Separately, Leslie Fay is expected this week to report
subpar results for the second quarter ended July 2, the source added, reflecting the effect of the six-week ILGWU strike that began June 1.
A second market source confirmed the less-than-expected performance in the quarter, saying Friday that the company will report a steeper loss than anticipated in its three-year business plan because it lacked a provision for the six-week ILGWU strike.
Still, the market source added, the loss will not be as great as last year's loss. Leslie Fay did not report quarterly results for the first half of last year, but will reveal comparable second-quarter results with the latest figures this week. For the first half of 1993, the company reported it had a pre-tax operating loss of $15.4 million. After accounting for reorganization charges and other special items, the company posted a final net loss of some $37.8 million.
A spokesman for Leslie Fay had no comment.
--Fairchild News Service

To access this article, click here to subscribe or to log in.

load comments
blog comments powered by Disqus