Aug. 12, 2008 — Jeffrey Prosser, former owner and CEO of Innovative Telephone, has lost another procedural round in the bankruptcy court — and he faces the imminent sale of a ragged SUV and a handsome old boat.
Stan Springel, the Chapter 11 trustee for what had been Prosser's corporate interests, succeeded in his efforts to restrict Prosser's ability to argue certain subjects in bankruptcy court. U.S. Bankruptcy Judge Judith Fitzgerald has ruled in favor of Springel's motion that Prosser no longer has standing — to use the legal term — to participate in those parts of the proceedings dealing with Prosser's former corporations.
"In essence," the judge ruled Aug. 1, "Jeffrey Prosser is not a creditor or an equity security holder of any of the Chapter 11 debtors …. To date, there is no indication that liquidation of non-exempt assets will repay claims in full. Indeed, it appears that the estates are insolvent."
If past behavior is a predictor, Prosser is likely to try to reverse this decision in the U.S. District Court on St. Thomas. The decision has no bearing on Prosser's role as an individual debtor, only on his connection with the corporations.
In other developments:
The non-profit bank that Prosser used for many years, the Rural Telephone Finance Cooperative, has filed papers objecting to lawyers' bills submitted by Husch Blackwell Sanders, a large mainland law firm. The firm claimed to perform services for Innovative Communication Corporation after the start of the bankruptcy proceedings, but did not have authorization from Springel to do the legal work in question, RTFC said. Without such an authorization there should be no payments, RTFC said.
This is the third time the court has coped with such an issue; it previously rejected efforts by two other lawyers who said they represented ICC. In each of the three instances, the lawyers adopted a pro-Prosser position.
Meanwhile, James P. Carroll, the Massachusetts businessman who was appointed by the court to handle Prosser's personal assets, has taken additional steps to get third parties to repay the estate money that Prosser paid to them after the start of the bankruptcy proceedings. Prosser's attorney have said in the past that such payments were perfectly appropriate.
Carroll's attorney, in this part of the case, has a name that may ring a bell with older readers. He is William Stassen, grandson of the late Republican governor of Minnesota, Harold Stassen, who was an active candidate for the Republican nomination for president in 1948 and 1952. The younger Stassen is with Fox Rothschild, the Philadelphia law firm, and was on St. Thomas last month for the hearings conducted in the territory.
Earlier Carroll, in his role as Chapter 7 trustee, asked the court to order American Express to repay the estate close to a million dollars. He said Prosser made the payments to the credit card company at a time when he did not have court authorization to make them. (See "Almost $1 Million Credit-Card Rebate Asked in Prosser Case.")
In a recent flurry of filings, Carroll, through his attorneys, has sought these repayments: $149,962 from Tropical Shipping and Construction, a Florida firm; $30,000 from the stadium in Florida where the Dolphins and the Mariners play their home games; $18,750 from John Justin Prosser, Jeffrey Prosser's adult child; and $15,353 from Caribbean Property Management and Investments, a St. Croix firm. Carroll did not disclose what these payments funded, but the first and fourth firms were probably paid for services to Prosser residences.
As for the vehicle and the boat, they're located at Prosser's summer place in Lake Placid, N.Y. Carroll has sought the court's approval to confirm three sales that have been arranged but not yet completed. In the case of the car, the court document describes it as a 2002 Ford Explorer that "has approximately 50,000 miles, a damaged front end, bald tires and [a] partially rusted body."
Carroll, selling into a market that has lost interest in gas guzzlers, managed to get a $3,000 offer for the vehicle.
The apparently good-looking boat is not very big — only 19 feet long. Given the fact that a Canadian businessman has offered $71,000 for the 67-year-old item, it must have its attractions. It is a 1941 "Chris Craft Barrel back runabout powerboat w/trailer," according to Carroll's report to the judge. Before World War II, Chris Craft was the Cadillac — if not the Rolls Royce — of boat builders, and this must have been one of the last ones they made before they converted their shipyards to Navy work.
Carroll has also arranged the sale of a "2000 Supra Assault 22 ft. Ski Boat w/trailer" for a gross of $16,000.
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