Home News Local news V.I. Phone User Given Short Shrift by Bankruptcy Judge

V.I. Phone User Given Short Shrift by Bankruptcy Judge

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Nov. 24, 2006 — The judge in the Prosser/Innovative Communications Co. LLC bankruptcy proceeding gave little consideration to a V.I. telephone user who sought to intervene in the proceedings.
Calling plaintiff Justine Flashman "simply a customer," Judge Judith K. Fitzgerald, in a hearing conducted via teleconference on Nov. 14 between her home court in Pittsburgh and the Virgin Islands, refused to grant Flashman status (i.e., the right to participate) and refused to unseal the currently secret negotiation documents between the creditors, on one hand, and the Prosser properties, on the other.
Jeffrey Prosser and two of his wholly owned corporations — Emerging Communications, Inc.; and Innovative Communication Co.; both grand-parent corporations to the V.I. local telephone company, formerly known as Vitelco — have filed for bankruptcy. Their principal creditors are Prosser's longtime bankers, the Virginia-based Rural Telephone Finance Cooperative and the former minority stockholders in Emerging, the Greenlight companies. The latter have won a major civil case against the Prosser interests in the Delaware courts.
The Prosser camp has twice reached tentative settlements with the creditors, and has twice seen these settlements crash and burn when Prosser was unable to arrange the needed financing. The details of the settlements have, at the request of both sides, been kept secret by court order.
The courtroom transcript for Nov. 14 showed the judge saying to Flashman's lawyer, Mark D. Hodge of the St. Thomas firm, Hodge and Francois: "I'm a little confused by Ms. Flashman's motion. She appears not to be a creditor, she is not a stockholder, she is not an equity owner, she's simply a customer that has no claim at this point against the estate."
Hodge argued: "the debtor [i.e. the Prosser interests] intends…[to] force it [Vitelco] to assume its debts by whether by assumption or whether by utilizing their assets as collateral. And in so doing, they threaten to increase the rates paid by my client, Ms. Flashman."
At this point the judge interrupted: "But then your client has maybe an interest in appearing before the rate commission [referring to the V. I. Public Service Commission] when and if the debtor ever gets to that point. But that doesn't give her standing to appear in this bankruptcy proceeding with respect to this settlement."
That was both the first time (so far) and the last time in these extended proceedings that anyone has spoken of the proposed settlement as possibly leading to telephone subscriber rate hikes.
The judge went on to say that Flashman's attempt to intervene in the settlement was moot, as she, Fitzgerald, had already ruled the settlement dead on the grounds of lack of financing.
Hodge then tried to plead the territory's public interest in unsealing the documents regarding the settlement (which is rumored to be in the $400 to $500 million range).
Again the judge intervened: "With respect to the order sealing the agreement, I'm denying that motion. At this point, the debtor is still in the process of negotiating. That agreement has information that could jeopardize the debtors' ability and all the parties' ability to enter any type of transaction at all. At some point in time, that motion will be unsealed. But this is not the time."
A little later Hodge tried to argue that the PSC should not continue to handle the proposed settlement secretly: " … the PSC will be asked to consider them under seal so that the public itself will not be allowed to take a look at it [the settlement] until after everything has been assumed and done, fait accompli."
Again the judge stated: "Whatever the PSC does is the PSC's process … I haven't been asked to adjudicate whether the PSC does or doesn't have an ability to unseal documents."
Throughout this dialogue, the lawyers for both Prosser and his adversaries remained silent, never feeling it necessary, apparently, to comment on either Flashman's attempted intervention or on the secrecy issue.
The judge has not decided a motion by Prosser and his companies to transfer the jurisdiction from the mainland to the islands. However Fitzgerald decides, she will remain the judge in the case as her duty stations include Pittsburgh, and both Wilmington, Del., where one part of the case was first filed, and the Virgin Islands, the locus of another filing.
Since the hearing, Prosser has offered to sell a number of his companies, including Vitelco, to the V.I. government for about $650 million. Gov. Charles W. Turnbull has called upon the Legislature to convene a special session Tuesday. On the agenda is a bill that seeks to appropriate funds to do a feasibility study on the purchase.
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