Remember Paul Harris Stores Inc., the once-mighty women's apparel retailer that flamed out in bankruptcy court five years ago?

No doubt, officials with Paul Harris' outside auditor, PricewaterhouseCoopers, wish they could forget. For years, PwC has been trying to bat down allegations that its negligence led to the retailer's downfall.

And now it's getting worse. In new court papers, attorneys for Paul Harris charge that PwC "set out to 'sanitize' its work papers ... to cover up its negligent failure to detect" a $7.5 million inventory shortfall.

Paul Harris attorneys have long argued that if PwC had uncovered the shortfall during the course of its work in 2000, the company would be alive today. They say the discovery of the discrepancy in the spring of 2001 scuttled the final stages of negotiations to line up new financing for the company and keep it afloat.

After the company failed, "PwC auditors spent over 100 hours 'wrapping up' the Paul Harris work papers-all for a company ... that would require no further services from PwC. PwC destroyed whatever earlier drafts of these work papers may have existed, so Paul Harris probably will never know most of the changes that were made," according to a September filing by Paul Harris.

Paul Harris attorneys say in court papers they have an e-mail trail that buttresses their position. In an April 2001 e-mail, a PwC auditor reported she had "updated" 2000 work papers for Paul Hams. (In a later deposition, the auditor didn't recall the changes but said they would have been "minor" or "administrative.")

A day after the first e-mail, the auditor sent this one: "The 2000 Paul Harris database has been archived and per firm requirements all information should now be shredded. Due to Paul Harris being in Chapter 7 bankruptcy, all information that you have related to Paul Harris should be destroyed immediately."

Ed Harris a Sommer Barnard attorney representing Paul Harris, declined to comment. Lee McTurnan, a McTurnan a Turner attorney representing PwC, said: "As a matter of policy, PricewaterhouseCoopers does not comment on pending litigation. PwC will file a reply to Paul Harris' allegations about documents and denies those allegations."

In. court papers, PwC casts itself as Paul Harris' deeppocketed scapegoat. It says the retailer, which until its final months had more than 250 locations, failed because of a series of management blunders, including an ill-conceived push to overhaul its merchandise mix.

"The record establishes that Paul Harris' ultimate liquidation was the result of the implementation of an untried business strategy, bad business decisions about sales, marketing and pricing that drove performance downward [and] bad clothes," according to a filing by PwC attorneys.

All the haggling in court isn't going to revive Paul Harris, which began in 1952 as a merchant of prepackaged apparel in supermarkets.

Still, the stakes are high. PwC is fighting to protect its reputation. And Paul Harris' creditors, who lost millions when the company folded, are fighting to cut their massive losses.

Emmis climax yet to come?

Why are investors abuzz again that Emmis Communications Corp. CEO Jeff Smulyan will take his company private?

It's because of a bombshell Smulyan slipped into a routine regulatory filing Sept. 18.

Smulyan, you'll recall, unveiled a plan in May to buy out other stockholders for $15.25 a share. He apparently was unable to win over a committee of independent directors, however, and on Aug. 4 withdrew the offer.

That's not the end of the story. In the Sept. 18 filing, Smulyan discloses that since Aug. 4 he and his advisers have talked with members of the independent committee about reviving his proposal, this time with a price of $16.80 a share-$1.55, or 10 percent, higher than the first offer.

So far, those talks haven't gone anywhere.

"Those discussions were discontinued on or around August 31, 2006, without a new offer being made, and the Special Committee is no longer active," the filing said.

But the disclosure that Smulyan remains open to a deal has kindled the hopes of some shareholders. In a Sept. 27 letter to Emmis' board, New York-based Arnhold and S. Bloechroeder Advisers, which holds 1.7 percent of Emmis' shares, notes that $16.80 represents a 40-percent premium to the average closing price for the five prior trading days. "As for the company's shareholders, we are highly confident that a transaction in the neighborhood of $16.80 per share would be quite well received," the letter said.

Speculation Smulyan ultimately will strike a deal already has nudged Emmis shares higher. They were trading on Sept. 27 at $12.55. In early August, they slumped as low as $10.85.