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Banks to Court: Deny Wachner Confidentiality

NEW YORK — The banks in the Warnaco Group bankruptcy have filed opposition papers asking Manhattan bankruptcy court to deny former chief executive Linda Wachner’s request for a protective order barring the production of certain documents...

NEW YORK — The banks in the Warnaco Group bankruptcy have filed opposition papers asking Manhattan bankruptcy court to deny former chief executive Linda Wachner’s request for a protective order barring the production of certain documents and even offering to keep any documents presented confidential.

The matter arose from Wachner’s claim for at least $25.1 million in severance. According to court documents filed by Wachner last month, the banks were seeking information on “virtually every aspect of Mrs. Wachner’s daily personal financial affairs after her termination without cause.”

According to the banks, Wachner “makes no attempt to satisfy her burden of demonstrating with the requisite specificity that there is ‘good cause’ for the court to preclude her from producing” the documents or from being deposed.

The banks also said they “consciously avoided broad-based requests to Wachner for all documents relating to her personal financial condition, such as her tax returns or personal financial statements, and instead propounded more pointed and less-intrusive requests aimed directly at the issues that she has raised” in court papers.

The banks, in court papers, said they would be willing to enter into a confidentiality agreement, which should “obviate any concern that Wachner may have with discovery relating to her ‘personal financial condition.’”

As reported, a focus for the court will be how to classify the payouts set forth in the termination clause under Wachner’s contract: either liquidated damages, and therefore a pre-petition claim that’s considered nonpriority, or severance, a priority claim that would give Wachner the administrative relief she’s seeking. The creditors have said that Wachner’s damages should be limited to the sum of one year’s compensation under her employment agreement and any earned, but unpaid, compensation as of June 11, 2001, the date of Warnaco’s Chapter 11 filing.

This story first appeared in the September 10, 2002 issue of WWD.  Subscribe Today.