Nov. 1, 2004 — John Patrick Raynor, long-time lawyer to Jeffrey Prosser, and a member of the board of directors of Innovative Communication Corp., has filed for personal bankruptcy.
His filing, with the U.S. Bankruptcy Court in Nebraska, indicates that the largest of his current and anticipated debts relates to two civil suits filed against ICC and its board of directors as individuals.
The document, filed with the court on Sept. 14, says (using the definitions of the bankruptcy code) that he has no assets and nearly $223 million in liabilities. Of the liabilities, 97 percent of their value relate to the two ICC cases.
Raynor lists $186 million as his liability in a case brought by minority stockholders against ICC and its directors in the Delaware Courts; this is a case that has been decided but judgment has been deferred in the hopes of a settlement. (See: "Prosser Ordered to Pay Millions to Ex-shareholders")
Another $30 million in liabilities is listed as a result of the case filed in the U.S. Virgin Islands federal court against ICC and its directors by the Rural Telephone Financial Cooperative, longtime lenders to Prosser and his operations. (See "ICC Hit With Additional Lawsuit")
Raynor is no newcomer to the Virgin Islands or to V.I. businesses. In late 1984 Raynor was one of three people who formed a company that sought to introduce video lottery gaming machines to the territory. The attempt failed. The other two officers of the gaming company, known only as VIG, were Marsha Schmit, the daughter of a Nebraska senator, and local businessman Ashley Andrews. Andrews is currently under federal indictment, charged with bribery, fraud and conspiracy in connection with a $3.6 million V.I. government contract awarded without competitive bidding to a company called Global Resources Management. (See "5 Indicted for Conspiracy in Sewage Contract").
The following year, in 1985, Raynor and Andrews were part of a group that sought to have the Government Employees Retirement System invest $10 million in a new bank. That didn't happen either.
As for Raynor's current straits, the multi-million dollar numbers mentioned in his bankruptcy filing are worst-case scenarios; perhaps the Delaware case will be appealed successfully, or it could be settled at a lower figure. It is also possible that some, if not most, of the damages will be borne by others in the case, such as ICC itself.
Regarding the RTFC case, it has not yet been argued, and one of the outcomes might be that ICC and its directors win the case.
Either way the bankruptcy law does allow such estimates to be made by the prospective bankrupt debtor, according to a lawyer familiar with bankruptcy law.
Raynor also has some substantial debts that do not appear to be connected with either ICC or the Virgin Islands. In all the following instances he notes "co-debtor" in his filings:
— Mid City Bank, Omaha, Neb., $200,000.
— Mid City Bank, Omaha, Neb., $1,348,000.
— Five Points Bank, Grand Island, Neb., $2,100,000.
— Walter Glass Sr., Trustee, Northfield, Ill., $250,000.
— Home mortgage, $172,044.
These claims are all noted as "secured claims" and as "amount of claim without deducting value of collateral," again, a worst-case scenario definition; for example, the residence may be worth much more than the $172,044 mortgage.
In addition, but still in the "secured claims" category, is a claim valued at $786,151 against which is noted: "Debtor [Raynor] borrowed $1.25 million in 1999 and pledged receivable from Emerging Communications, Inc." Emerging Communications was the predecessor company to ICC.
Although Raynor lists no assets (again, as defined by the bankruptcy law) he did indicate substantial income from the start of the year until the September filing date, including $420,000 in legal fees from ICC and $82,500 in director fees from "ICC, its subsidiary, Vitelco, & BTL from 1/1/2004 through bankruptcy date."
In several places in the 33-page document there are references to losses incurred by Raynor in connection with, among others, A&G Precision Parts, "an Oregon limited liability company," and Imperial Fitness Health Club LLC, "a defunct operator a[nd] health club in Downey, California." In the latter instance the filing notes: "…a business in which Debtor [i.e. Raynor] suffered a $615,000+ judgment besides incurring a majority of a $1.4 million loss."
There is another set of debts, this time without definitional problems: he reported he owed $29,104, $22,033, $7,893, and $3,725, respectively, to four different credit card companies.
Raynor's financial troubles, then, are not confined to the Virgin Islands. The legal situation is complex enough so that it is impossible to know whether the off-island problems (only some of which are mentioned in this article) would have been sufficient to cause the bankruptcy filing.
The first step in the bankruptcy process, the meeting of creditors, took place on the morning of Friday, Oct. 22, in the U.S. Courthouse in Omaha, Neb. The attendees were not listed in the filing.
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