Dec. 28, 2008 — The pension funds for workers connected with Jeffrey Prosser's former enterprises have received two payments totaling $3 million, according to court documents.
As bankruptcy proceedings against the former owner and CEO of Innovative Telephone ground along, the Chapter 11 trustee in the case, Stan Springel, told the bankruptcy judge that $1 million had been paid to the pension funds by the local phone company (Vitelco). Springel conveyed the information Dec. 19 in one of his monthly reports to the judge.
In another move, Judge Judith Fitzgerald ruled that the pension fund would receive $2 million from the sale of Prosser's former French properties, as well as cable operations in the Down Islands and in eastern France. Although it is well known that the former Prosser properties owe many more millions to these funds, the outstanding amount was not specified.
Further, Springel reported that Vitelco has ceased, at least for the time being, to fund the administrative costs of the bankruptcy process. These costs have included payments to the three court-appointed officials individually, and all of their various law and accounting firms.
"As a result of agreements by the trustee with … the U.S. Department of Agriculture and Vitelco's preferred shareholders …," Springel wrote, "Vitelco has ceased upstreaming funds to New ICC for payment of administrative expenses. Vitelco is the primary cash-generating source for New ICC. As a result, the trustee and his professionals have not been paid … for any work whatsoever for the six-month period since May 1, 2008. "
Vitelco owes money to the preferred stockholders and the Rural Utilities Service of Agriculture. A $5.7 million loan to the estate from the main creditor, Rural Telephone Financial Cooperative, will be used to pay some of the bankruptcy professionals' bills, Springel's court document said.
In other developments:
— A conflict has erupted between the two trustees, Springel and John Carroll, the Title 7 trustee handling Prosser's personal bankruptcy estate. Carroll has filed a suit against Springel over the issue of a debt he says Vitelco owes to that part of the estate managed by Carroll. The suit arose from transactions between Vitelco and the V.I. Community Bank, another one-time Prosser-controlled entity. Carroll termed the transaction an "unfunded withdrawal" by Vitelco and an "unauthorized loan" from the bank. The amount at stake was originally $1.9 million, but some payments have been made on that sum.
— The federal district court judge hearing appeals on the case, Curtis V. Gómez, who sits in St. Thomas, has ruled against the motion by Dawn Prosser, Prosser's wife, to "withdraw the reference" in an order dated Dec. 5. Had she prevailed it would have taken the bankruptcy proceedings out of the specialized U.S. Bankruptcy Court and placed them in federal district court. Gómez has made several other, somewhat similar, procedural decisions against attempts by one or the other of the Prossers to delay the bankruptcy process.
— For the first time in any of the court documents seen by the Source, Springel's report included a reference to the level of subsidy payments made to Vitelco by a Federal Communications Commission entity. These payments, part of a one-time New Deal arrangement to bring affordable telephone service to rural and insular households nationwide, brought about $25 million a year to the local phone company over a period of many years.
The reference in Springel's report was brief; it said, in connection with the tight liquidity of the company, that part of the problem was "the repayment of [FCC-generated] revenues due to overpayments received in the past under prior management."
Years ago the Source reported that the per-household subsidy obtained by Vitelco from the FCC fund was well above the national average and exceeded by few mainland phone companies. Among these were some small organizations serving tiny numbers of widely scattered Eskimos in outback Alaska.
Back Talk Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.
