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Busy Judge in Prosser Bankruptcy OKs Sale of Company Cars

Nov. 16, 2007 — At a St. Thomas hearing in the bankruptcy cases of Innovative Communications Corp. and owner Jeffrey Prosser, U.S. Bankruptcy Judge Judith K. Fitzgerald ruled Thursday on more than 20 motions, among them one allowing the sale of a Bentley Arnage worth around a quarter-million dollars new — one of three luxury autos owned by ICC.
Fitzgerald also issued rulings to extend a restraining order on selling other items, deny some attorneys status to make motions, and delay a decision on whether to charge St. Croix attorney Jeffrey Moorhead with contempt of court, moving the long and acrimonious proceedings another step forward.
The restraining order affected property purportedly belonging to Dawn Prosser, Jeffrey Prosser's wife. Stan Springel, the court-appointed Chapter 11 trustee in charge of ICC — Vitelco's parent company — filed a motion asking that some of the Prossers' property allegedly purchased with ICC funds be turned over, and for a temporary restraining order preventing them from selling the property.
In her response, Dawn Prosser sought permission to sell four sculptures valued at a total of $650,000 but otherwise did not object to Springel's motion. Dawn Prosser is also arguing that some of the property has been in her possession since before she married Jeffrey Prosser and thus are not part of Mr. Prosser's assets.
On Oct. 29, Fitzgerald issued a restraining order that included the statues. Late Wednesday, Springel and Dawn Prosser and their attorneys agreed on extending the stay one month.
Springel's attorney Dan Stewart apologized to Fitzgerald for the late change to the court's agenda.
"This negotiation only culminated very late the night before," Stewart said. The order was extended to Dec. 15.
Springel asked for and got permission to sell a set of miscellaneous "non-core assets of the New ICC estate that are free and clear of liens." The ICC corporate property to be sold included the 2005 Bentley and two 12-cylinder Mercedes Benz autos, season tickets for the American Airlines Arena in Miami, good for all events at the arena; and four tickets for a suite at Miami's Robbie Stadium for Miami Dolphins football.
A Bentley is a Rolls-Royce with a slightly different radiator treatment; the Arnage is a Bentley model — according to a Google Internet search — worth $221,990 to $263,990 new.
Springel asked for permission to sell items worth up to $500,000 without coming back to the court. Fitzgerald ruled Springel could dispose of property under $20,000 in value, so long as he filed notice on the court docket a week in advance. Other parties to the proceedings would have until two days before the sale to object. If there is a problem, she would hold an expedited hearing, she said.
Fitzgerald also ruled attorney Adam Hoover and former ICC board member John Raynor do not represent ICC and quashed an appeal and other motions filed by Hoover for that reason.
"Mr. Springel is the spokesperson for (ICC) and Mr. Springel has never authorized Mr. Hoover to represent (ICC)," Stewart said.
Speaking to Hoover and Raynor on speakerphone, Fitzgerald was blunt.
"You have no standing to file," she said to Hoover. "You have no standing to appear, you have no standing to represent the debtor. This court does not recognize you. The debtor has different counsel. … I am striking all the pleadings."
Fitzgerald said Raynor could appear as a party of interest as a former board member, but could not make any filings on behalf of ICC or its board. Moorhead's contempt charges (See: http://www.onepaper.com/stcroixvi/?v=d&i=&s=News:Local&p=1201842610 Moorhead Gets More Time in Contempt of Court Charge) were continued until February at the behest of one of Prosser's biggest creditors; a group of hedge funds referred to collectively as the Greenlight entities. (See "Prosser Pushed toward Bankruptcy.")
Springel, who had first asked Moorhead be held in contempt, was willing to let the contempt charge drop. Stewart said Moorhead had rescinded his attempts on behalf of the Public Services Commission to prevent Springel from taking control of ICC, so they were no longer concerned about the matter.
Greenlight attorney Greg Galardi said the contempt charge should be continued to ensure Moorhead's actions did not cost the company money and affect what Greenlight might ultimately be able to recover from ICC.
"Our concern is his actions may have cost the estate a considerable sum of money," Galardi said. "There is a possibility the PSC will charge Innovative (ICC) for those actions. We would also like to know who it was that actually drafted some of those orders and see why Mr. Moorhead took those positions when in fact the Attorney General of the Virgin Islands told him he was not authorized to take those specific actions."
Whether Moorhead is charged with contempt of court may depend upon whether Vitelco is charged by the PSC for Moorhead's ill-fated work as a hearing examiner. Fitzgerald said she would be inclined to dismiss the charges if Vitelco is not billed for Moorhead's actions.
"If there is no charge, then there is no loss," Fitzgerald said.
Prosser himself was not at Thursday's hearing.
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