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HomeNewsArchivesBankruptcy Judge Rules Against Prosser; Approves Vitelco Sale

Bankruptcy Judge Rules Against Prosser; Approves Vitelco Sale

U.S. Bankruptcy Judge Judith Fitzgerald issued three blistering court orders Tuesday against Jeffrey Prosser, former Innovative Telephone owner and CEO and his lawyers:
–approving the sale of Innovative Telephone, the cable companies, and other commercial properties to the Rural Telephone Finance Cooperative (RTFC);
–dismissing Prosser’s attempts to delay (stay) that sale; and
–telling Prosser’s mainland lawyers to pay the legal fees of the court-appointed trustee, James P. Carroll, and his lawyers, in connection with some of the secondary disputes in this long, drawn-out bankruptcy case.
The principal order called for “approving sale of Group I assets free and clear of all liens, claims, encumbrances and other interests” to RTFC, the non-profit bank based in Northern Virginia that had lent Prosser and his companies over half a billion dollars. These assets include the telephone company, the territory’s cable companies, cable properties in BVI and St. Martin, and various other commercial activities.
This sale, or more exactly these sales, had been previously approved by the V.I. Public Service Commission, the Federal Communications Commission, and British and Dutch authorities. RTFC took over the properties as partial settlement of what Prosser and his firms owed to it; there had been no bids for these properties at a price that the other court-appointed Trustee, Stan Springel, thought worthy of consideration.
Prosser and his lawyers have waged a series of legal actions designed to upset the sale, and to delay it. The judge in a lengthy, extensively footnoted, 30-page order swept away all of the objections raised by Prosser.
In a separate order she also denied what she described as “Jeffrey J. Prosser’s emergency motion to stay the [sic] Stan Springel’s, the Trustee, Motion to Approve the Sale of Group I assets.”
In her reasoning as to the decision, she wrote: “Whereas Jeffrey J. Prosser has not established a likelihood of success on the merits regarding his objections to the sale, or that he will be irreparably injured without this stay; but the stay will substantially injure the creditors, the estate and the parties to the sale by forestalling a closing which is necessary to continue and to improve the telecommunications services provided… Now Therefor it is ordered that… the motion be denied.”
Prosser had argued that were things handled differently, he would not have to pay $100 million as part of the settlement; this was just one of the arguments that the judge rejected. As to what Prosser will owe, she wrote: “Moreover, all of the sales conducted by the Trustee to date, even combined with this one [of the Group I assets], have not generated sufficient proceeds to satisfy the [$524 million] judgement, and more than $100 million will remain due even after the purchase price of this sale is set off against the claim…”
The payment of Prosser’s and his lawyers’ legal fees – lawyers do hire other lawyers sometimes – had been asked for by James Carroll, the court-appointed Trustee who has the task of administering Prosser’s convoluted finances for the estate.
The court noted that the fees were caused by the Prosser lawyers filing a “series of baseless pleadings against Carroll and his lawyers.
According to her order, Prosser lawyers Norman A. Abood, Robert F. Craig and Lawrence Schoenbach "have unreasonably and vexatiously multiplied proceedings in bad faith, constituting violation [of the bankruptcy law].” [“Multiplied” being apparently used here as an active verb.]
The amount of the fees is to be decided later.
Her ruling against these lawyers must come as a double blow to them, as they have testified that they have been paid little, if anything, in recent years, for their services to Prosser.
If the past is any indication, Prosser and his lawyers will appeal all of these setbacks to the Federal District Court presided over by Judge Curtis Gomez; most of Prosser’s numerous appeals to that court have failed in prior years.

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