Sept. 19, 2008 — The V.I. Public Service Commission will establish the telephone rates for Vitelco phone users by Dec. 3, according to an announcement during a Sept. 18 hearing in Pittsburgh before U.S. Bankruptcy Judge Judith Fitzgerald.
The setting was the regular monthly session on the bankruptcy of Jeffrey Prosser, former CEO and owner of Vitelco. The announcement was made by Daniel Stewart, an attorney for Stan Springel, the court-appointed Chapter 11 trustee for what had been Prosser's corporate properties.
Springel's efforts to sell these corporate entities, Stewart told the judge, have been complicated by both the global credit crunch and, locally, by the lack of clarity (for potential buyers) of the Vitelco rate structure.
As a result, the corporate-sales efforts were suspended earlier in the summer, while sales continued for other Prosser assets, such as works of art, expensive automobiles and real estate.
To settle the question of rates, Stewart said, Springel has been working closely with the PSC to jump start its once-every-five-years, mandatory rate investigation. He laid out the timetable for the conclusion of the investigation, the setting of new rates and the sale of Vitelco:
Nov. 26 — Judge Thomas Moore, in his new role as PSC hearing examiner, will issue a report to the PSC on proposed rates.
Dec. 3 — The PSC, using Moore's report, will announce new rates.
Dec. 17 — Vitelco and other corporate properties of Prosser will be sold at a Springel-managed auction.
Dec. 19 — The results of the sale will be brought to Fitzgerald for her approval or rejection.
Angela Pappas, an attorney for the Greenlight interests, a major Prosser creditor, expressed doubts that the condensed schedule could be executed. The judge indicated her fervent hope that the schedule could be followed, and said she would have some strong questions if it did not work.
No one from the PSC or any other V.I. governmental entity was in the courtroom, though some private-sector V.I. lawyers participated in the hearing via teleconferencing.
The hearings are drawing smaller numbers of attorneys as the months pass. Prosser had only two at the hearing, Robert Craig of Omaha, his long-time counsel, and his new lawyer from Toledo, Norman Abood, who did most of the talking for Prosser on Thursday. Earlier this year Prosser usually had half a dozen lawyers in attendance. The non-Prosser delegation was smaller, too, numbering five.
Although the question of Vitelco's rates will have an impact on most of the V.I. population, there was no discussion of how Moore and the PSC will go about their work. Nor was there any mention of the level of the rates that the Source, in the past, has found to be among the highest in the nation.
There was extensive discussion, however, about the future of Prosser's residence on St. Croix. Well-represented at the hearing were lawyers for those entities wanting a share of the sales proceeds — if, in fact, there is a sale. These included advocates for the following: the Rural Telephone Finance Cooperative, Prosser's long-time bankers; Greenlight, representing the former minority shareholders in an earlier Prosser holding company; two banks with overlapping mortgages on the Shoys property; and Jeffrey and his wife, Dawn Prosser. In addition, eight construction firms have liens against the property for unpaid bills.
During the course of the day, one lawyer said that something on the order of $18 million had been spent by Prosser interests on the as-yet-unfinished mansion.
The judge handed down decisions on several other matters:
— Over Greenlight objections, she ruled that Houlihan Lokey Howard & Zukin Capital could be hired as a financial advisor to help with the sale of the Prosser properties. Greenlight's lawyer said another financial advisor would be expensive and unnecessary.
— She vigorously quashed an attempt by the Prossers to secure a deposition (a structured, out-of-court, lawyer-run interview) of Prosser's former valet, Arthur Stelzer. Abood said he was concerned with Stelzer's credibility. The judge noted that Stelzer had already been deposed once, and had testified, in person, at one of the St. Thomas hearings. If the Prossers want more information from him, Fitzgerald said, they had ample opportunity to get it — and, further, that the time had passed for setting up such interviews.
— Fitzgerald also addressed the question of rebuttal depositions of four residents of Florida, all of whom Abood wanted to interview regarding Stelzer's credibility. The Prossers had two choices, the judge said: Either the four could be called as witnesses at a regular hearing or, if they were deposed, the Prossers would have to pay the expenses of opposing attorneys who would attend the depositions, with the expenses to be paid in advance of the depositions.
Neither of the alternatives were welcomed by Abood. Were they to be called as witnesses, the four could not be compelled to travel more than 100 miles. Were Prosser to have to pay the travel costs of the opposing lawyers, it would be an additional expense and, as Abood hinted, an unusual one. As the hearing ended, it was not clear which approach Abood would use.
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