Aug. 2, 2006 — More information has emerged in the last 24 hours on the Jeffrey Prosser/ICC bankruptcy filings, but many questions remain unanswered.
It is now clear that a total of three voluntary bankruptcy filings have been filed, in the Virgin Islands; these are all under Chapter 11 of the U.S. Bankruptcy Code, which is designed to protect corporations from overly assertive creditors. These three filings relate to, but are separate from, ongoing efforts of Prosser's adversaries to thrust involuntary bankruptcy on Prosser and his companies. (See "ICC, Prosser File for Bankruptcy").
Further, there are now five different listings of ICC creditors on file. However, many of the creditor listings do not currently indicate how much money is owed to them.
And then there is the question of the involvement of Vitelco, the territory's only phone company. One of Prosser's lawyers, Carol Rich of St. Thomas, says that neither Vitelco nor the Daily News are involved in the proceedings, though it is generally acknowledged that they are both totally owned by the entities seeking bankruptcy protection.
Among the basic questions remaining are these: Will Prosser perpetuate his control of Vitelco? And, ultimately, how much money will the creditors receive?
Some information is now available to help answer three other questions: 1) Who filed for bankruptcy? 2) What does Chapter 11 do, generally? and 3) Who owes whom how much?
The three filings in U.S. bankruptcy court, in St. Thomas, were made by Emerging Communications, Inc.; Innovative Communication Company, LLC; and Prosser, personally. Emerging Communications and Innovative Communication Company, LLC, are both wholly owned by Prosser and are high in the corporate hierarchy, which includes, lower down the ladder, Innovative Communication Corporation, which is the parent company of Virgin Islands Telephone Corporation (Vitelco) and the Daily News (also wholly owned by Prosser).
All three filings were for Chapter 11 bankruptcy status. Each of the three noted an estimated $100 million-plus in assets and an estimated $100 million-plus in debts.
Signing for the two corporations was Eling S. Joseph, identified as corporate secretary of Emerging and as secretary of Innovative. The signatures on Prosser's personal filing include his own, with a street address of "4A & 10AA Estate Shoys, St. Croix, Virgin Islands 00820"; and those of two lawyers: Thomas Alkon, PC, of Christiansted; and Robert F. Craig, PC, of Omaha, Neb., Prosser's old home town.
What's Chapter 11?
There are several chapters in bankruptcy law, and 11 is one of the more complex and the one often chosen by corporations or wealthy individuals. It, according to one of several authorities one can consult on the Internet, "allows businesses to reorganize themselves, giving them an opportunity to continue to operate and get out from under certain burdensome leases and contracts."
Another expert explains: "The debtor usually remains in possession of its assets, and operates the business under the supervision of the [U.S. Bankruptcy] court and for the benefit of creditors. The debtor in possession is a fiduciary for the creditors. If the debtor's management is ineffective or less than honest, a trustee may be appointed."
Sometimes firms in Chapter 11 recover their financial standing and get out of bankruptcy, as K-Mart and United Airlines have done. More often they do not.
Who is Owed How Much?
There are five lists of unsecured creditors (i.e., those in which the debt is not secured by a mortgage or some other financial instrument). Some of these lists might suggest a hurried filing. For example, in the case of the "list of top twenty unsecured creditors" in Prosser's personal filing, the addresses include the street address, the state or territory and the zip, but not the city. So, one sees, for example:
"Kendricks Restaurant $7,000, King Cross Street, Virgin Islands, 00820."
Heading the list in the personal filing is the Rural Telephone Finance Corporation, at $100 million. RTFC is the Virginia-based specialized banking institution that joined in the effort to force Prosser into bankruptcy. The total owed by various Prosser interests to this bank is believed to be around $600 million.
Next are three Greenlight companies where the amount owed is shown as "undetermined." The Delaware courts have ruled in favor of the Greenlight companies, representing the former minority stockholders of Emerging Communications, and set the amount owed in excess of $100 million.
Next is Redwood Domestic Fund, LP, one of the holders of some $85 million in preferred stock in Vitelco; the size of that debt is labeled "unknown."
The balance of the creditors in this list have much lower dollar figures attached and tend to be in the Virgin Islands. They are, as shown in the document:
–Caribbean Property Management, 59 Kings Wharf, V.I., $9,000.
–Kendricks Restaurant, King Cross Street, V.I., $7,000
–Buccaneer Hotel, PO Box 25200, V.I., $4,500
–Tamarind Reef Hotel, 5000 Southgate, V.I., $2,000
–Florida Power and Light, PO Box 025575, Florida, $1,901
–Wild Orchard Flower and Gift Shop, 113 Constitution Hill, V.I., $1,500
–Schooner Bay Market, #1 Estate Mount, V.I., $1,200
–El Patio Flower and Gift Shop, 3D Constitution Hill, V.I., $1,200
–Caribbean Cooling, PO Box 993, V.I., $1,000
–Bell South Telephone, 1155 Peachtree St. NE, Georgia, $840
–Roof Top [no address], $350
–Direct TV, 2230 East Imperial Highway, California, $115
There are two lists of creditors in the Emerging filing. The first contains the heading, "list of creditors holding largest unsecured claim," and includes four entities:
–Greenlight, with the claim regarded as "disputed" and "unliquidated";
–Banco Popular CC, St. Thomas, a $406,067.33 credit card debt;
–Orrick, Herrington & Sutcliffe LLP, a Washington law firm, $300,000; and
–the San Juan Postmaster, at $1,481.03.
There is also another tabulation, "Creditor List," without dollar amounts, including the previously mentioned RTFC and Greenlight, and these eleven others:
–Government of the Virgin Islands
–U.S. Internal Revenue Service
–Buccaneer Bay Landowners Association,
–Bell Telecommunications West Indies, Ltd., Anguilla, BWI
–Banco Popular, Hibiscus Branch, St. Thomas
–Master-Risk, Inc., Christiansted
–ICC Long Distance
–The Sampson Firm, Omaha
The filing for Innovative Communication Company, LLC, also has two lists of creditors, one with dollar figures and one without. The first is a short one noting: "creditors holding largest unsecured claim." It includes the previously mentioned Greenlight, and the Washington law firm of Orrick, Herrington. The last entity on this list, again, is the Omaha law firm, Sampson Firm, and it is owed $30,150.
The other "Creditor List" in this filing includes, again, Greenlight, RTFC, ICC-Corp., Orrick, Herrington, and the Sampson Firm. Three other entities, not previously listed, are:
–Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A, a Miami law firm.
–Atlantic Aircraft, 56-58 Hill St., St. Croix
–Dallas County, Texas.
The Source had a conversation last year with a member of the county's legal staff in an effort to find out about this item. The attorney had no idea why Dallas County was on that list of creditors and said it might be a clerical error.
One open issue is the venue in which the bankruptcy cases are to be located. The choices are Delaware (the favorite of the other interests) and the Virgin Islands (Prosser's choice); filings have taken place in both locations. Prosser has filed papers seeking to move everything to the
Oddly, because of the nature of the staffing of the U.S. Bankruptcy Courts, the same bankruptcy judge, Judith Fitzgerald, will preside whatever venue is chosen, as she routinely sits in Pittsburgh, but also serves in both Wilmington, Del., and the Virgin Islands.
There is a reason for the dispute over jurisdiction, however, for if the location is to be Delaware, any appeals would go to the U.S. court in that state, while appeals from the same judge, sitting in St. Thomas would go before the U.S. District Court in the Virgin Islands – Judge Curtis Gomez — unless he were to recuse himself due to his relationship with ICC Vice President Holland Redfield.
The venue issue may be decided by Judge Fitzgerald within the next 30 days.
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