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HomeNewsArchivesJudge Settles on $650 Million Figure for Prosser’s Debts

Judge Settles on $650 Million Figure for Prosser’s Debts

July 24, 2007 — Jeffrey Prosser, owner of Innovative Telephone, has just received a quarter of a billion dollars worth of bad news from the U.S. Bankruptcy Court.
Prosser's lawyers argued for months that he and his firms were entitled to settle their principal debts for $402 million plus accrued interest, while his adversaries said the correct figure was $650 million plus interest.
The judge decided on the higher figure following extensive proceedings in which the creditors successfully argued that the one-time $402 million discount agreement with the creditors involved a payment by a set date. Once that date had passed without the full payment, they argued, the deal was no longer valid.
This comes as a blow to the Prosser forces. After months of effort, they had worked out an arrangement with the Rothschild Bank to finance a takeover of an unspecified collection of Prosser assets for the $402 million amount. Observers doubt that the arrangement with Rothschild can be stretched to cover the additional quarter of a billion dollars. (See "Good News and Bad News for Prosser and His Companies.")
Meanwhile, other pressures on Prosser mounted. Judge Judith K. Fitzgerald has before her a motion from an official she appointed, the examiner of Prosser's finances. The examiner asks that Prosser open up his books, which he has so far failed to do. The examiner is a retired chief judge of a U.S. Bankruptcy Court.
Further, the Greenlight Companies, one of Prosser's major creditors, have renewed their efforts to reclassify the disputes as Title 7 rather than Title 11 cases. Title 11 allows a debtor to continue to control his properties while efforts are made to settle the debts. Title 7 instead forces a fairly rapid sale of the assets. Prosser opposes a Title 7 process.
Greenlight has filed papers asking for a hearing on this issue on an urgent basis Aug. 3 in Pittsburgh, Fitzgerald's home court. Greenlight argued that Prosser's holdings would "continue to suffer unnecessary erosion" if the reclassification were not ordered. The debtors have objected to the cost to them of the myriad lawyers' and accountants’ fees generated during the litigation.
Meanwhile, in yet another court filing — now nearing a total of 700 — Prosser submitted his most recent monthly household financial report. For June, he said he had restored his earlier level of payments to himself of $120,000 a month after reporting a monthly income of $180,000 for May.
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