Aug. 1, 2006 — Innovative Communication Co., LLC has filed for voluntary bankruptcy, ICC officials announced Tuesday morning.
Jeffrey Prosser, owner of ICC, has also filed for personal bankruptcy, according to documents filed in the U.S. Bankruptcy Court in the Virgin Islands. That document indicated that both Prosser's assets and his debts exceeded $100 million.
ICC had been battling against an attempt by other financial interests to force the firm into involuntary bankruptcy for most of the last six months. The company had worked out a secret deal with the other forces – its longtime banker, Rural Telephone Finance Corporation (RTFC) and the Greenlight companies, formerly minority stockholders in ICC's predecessor public company – to settle various disputes and keep ICC out of bankruptcy. This settlement had been sealed by the U.S. Bankruptcy Court in Delaware. (See "Vitelco, ICC and Prosser Have Mixed Week in the Courts").
Though the nature of the settlement was secret, one element leaked out recently in court documents – the payment date was July 31. Apparently when ICC could not meet its financial obligations under the settlement agreement on that date it filed for bankruptcy.
The full text of the ICC press release follows:
Emcom ICC-LLC Files for Voluntary Bankruptcy Protection
Holland L. Redfield II, VP of Corporate Affairs for Innovative Communication Corporation said today that as a result of the ongoing dispute between Emcom and ICC-LLC with the Rural Telephone Finance Corporation (RTFC) and the Greenlight parties, Emcom and ICC-LLC have filed today for voluntary bankruptcy protection. This filing is a result of not being able to arrive at a final settlement between these entities at this time. It has been determined that this filing is in the best interest of the company. However, we are still confident that a final settlement is possible. Redfield made it clear to our employees of ICC and its subsidiaries that this will in no way affect their positions with the company and wants to make it clear to our customers that this will not affect our service to them. Redfield said that as the situation is fluid, we will keep our employees and our customers informed if there is any change. This is only a continuation of this ongoing complex litigation. [end of release]
Redfield referred a call from the Source to attorney Carol Rich with Dudley, Clark and Chan on St. Thomas. Rich said the three voluntary bankruptcy petitions – including Prosser's personal bankruptcy petition – had been filed in the Virgin Islands because, "Mr. Prosser lives in the V.I."
She said the Daily News and the Virgin Islands Telephone Co. (Vitelco) were not included in the filings; only the companies that were part of the involuntary bankruptcy proceedings that have been ongoing in the Delaware Courts since February are included, which is Innovative Communications Co., LLC – "the upstream companies," Rich said.
This was the latest in a long series of financial setbacks for ICC. The company's failure to meet its obligations to pay into the workers' pension fund triggered another lawsuit by a different set of creditors (See "Federal Agency Files Liens Against ICC Companies"). The holders of some $85 million in preferred stock in Vitelco – a different set of investors from RTFC and Greenlight – sued for repayment of their investment because ICC had, without the authorization of the preferred stock holders, failed to pay into the pension fund.
This was not the first run-in with federal agencies. In 2001, the Internal Revenue Service filed a $1.5 million lien against Vitelco for failure to pay its employees Social Security and unemployment taxes. ( See "IRS Files $1.5 million Tax Lein Against Vitelco").
It is unclear as of publication why Vitelco is not involved in the bankruptcy since RTFC, which has loaned more than $600 million to the territory's only phone company, is second on the list of ICC-LLC creditors.
The Source will publish information on further developments as it becomes available.
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