Washington — The federal official monitoring New Century Financial Corp.'s bankruptcy says the failed mortgage lender shouldn't be able to keep secret an examiner's report on how it handled its cash after filing for bankruptcy protection.

In papers filed Wednesday with the U.S. Bankruptcy Court in Wilmington, Del., U.S. Trustee Kelly Beaudin Stapleton said there's a “significant public interest in affording public access to the report.” Stapleton asked the court to deny New Century's request to keep the report, and the company's reply to the report, under seal.

New Century cited attorney-client privilege in asking the bankruptcy court to keep secret the results of an investigation conducted by Michael J. Missal, a Washington, D.C., attorney appointed by the court as a special investigator in New Century's Chapter 11 case. A court hearing on the company's request is scheduled for Wednesday.

Missal on Nov. 21 filed his report on whether the company broke bankruptcy rules in handling its finances in the wake of its bankruptcy filing last year. He's also expected to issue a report on the accounting errors that led the company to admit that its financial reports for 2006 and 2005 were materially wrong.

New Century, which says it “strongly” disagrees with large portions of Missal's findings, said Wall Street investors fighting over how much New Century owes them could take advantage of the information in the report.

Stapleton, however, said New Century provides no justification for its “extraordinary” request to keep both Missal's report and the reply under seal in their entirety. She said the company should instead seek the redaction of individual portions of the report and reply.

New Century filed for bankruptcy protection on April 2, 2007, and has since sold off its key assets and laid off more than 5,000 employees. The Irvine, Calif., mortgage lender sought shelter in Chapter 11 after announcing its financial statements for 2006 were materially false.

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