Judge denies stay order for info from Bloomberg reporters' sources

An exterior view of the Bloomberg building is seen in New York, November 7, 2013. REUTERS/Eduardo Munoz

By Tom Hals WILMINGTON, Del. (Reuters) - A U.S. judge denied on Tuesday a request by media company Bloomberg LP to stay an order requiring more than 100 people to disclose information they shared with its reporters about a bankrupt mining company, which Bloomberg said inhibits its free speech rights. U.S. Bankruptcy Judge Christopher Sontchi in Wilmington, Delaware curtly dismissed the request by Bloomberg's legal team to stay his order for 48 hours so the company could appeal. Last week, Sontchi ordered 123 people to disclose by the end of Tuesday their contacts with Bloomberg reporters regarding Molycorp Inc over the prior 60 days. Lawyers for Bloomberg declined to comment after the hearing, referring to a statement issued after last week's order. "The order issued by the Delaware bankruptcy court last Thursday strikes at the heart of the First Amendment and the fundamental mission of a free press: to provide transparency into important public events," John Micklethwait, Bloomberg's editor-in-chief, said in the statement. Bloomberg can still ask the U.S. District Court to stay the order before the end of Tuesday. Bloomberg has reported, citing unidentified sources, that a confidential mediation ordered by Sontchi failed to produce a consensual plan to end the bankruptcy of the largest U.S. maker of rare earth materials used in military equipment. Molycorp and its creditors and other parties were ordered by Sontchi into confidential mediation in November. Beginning in December, Bloomberg published three articles that described efforts to find a buyer for Molycorp. The articles, by Jodi Xu Klein, and one that included reporting by Steven Church and Fion Li, cited unidentified sources. Bloomberg's court filing said the order casts too broad a net. It said the judge has ordered bankers, lawyers and advisers to give information even though their discussions with Bloomberg journalists may have had nothing to do with the Molycorp bankruptcy. The order also required the parties to disclose if they knew who provided information to Bloomberg. The declarations would be sealed from the public, but shared with key parties. Luc Despins, who represents the official creditors committee, reminded the court on Tuesday that the disclosures order was drafted by the parties involved in the case. The journalists' organization Reporters Committee for Freedom of the Press said Sontchi's order would have consequences beyond Molycorp's bankruptcy. "The repercussions from a single legal demand affect not just the work of the targeted journalist but all other journalists whose sources will hesitate and hold back information on matters of public concern, such as the operation of the judicial system," the group said. (Reporting by Tom Hals in Wilmington, Delaware; editing by David Gregorio and Alan Crosby)