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Prosser Fails to File Financial Reports with Judge

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Jan. 7, 2007 — Bankrupt firms, like kids in school, are supposed to do homework; if they don't, they get in trouble with the authorities.
Jeffrey Prosser's firms, including the parent to the V.I. Telephone Company, have failed to file the required financial reports for the months of August through December 2006, according to the bankruptcy court.
Judge Judith K. Fitzgerald of the U.S. Bankruptcy Court has issued a "show cause" order on Prosser and his firms, saying that if they do not file the required reports by Jan. 10, she will hold a hearing two days later on whether Prosser's firms should be taken out from under the protection of the Bankruptcy Act.
The federal Bankruptcy Act protects troubled companies from some collection procedures that creditors might otherwise employ.
The formal language reads: "It is further ordered that in the event such reports are not timely filed, a Rule to Show Cause hearing will be held on Jan. 12 (in Pittsburgh) … to show cause why the above cases should not be converted or dismissed and sanctions imposed for failure of Debtors to file said monthly financial reports."
The judge's order on the missing financial statements indicates that no such monthly reports have been filed by the Prosser camp since it filed for voluntary bankruptcy in July 2006.
The Jan. 12 hearing will also deal with the continuing controversy over whether the V.I. Bankruptcy Court or the one in Delaware will have jurisdiction over the case. The hearing will also address an effort by Prosser's creditors to remove the veil of secrecy that now covers much of the financial information before the court on Prosser and his firms.
Fitzgerald, a traveling judge who sits in Delaware and the Virgin Islands along with Pittsburgh, will preside.
Meanwhile, the U.S. Justice Department has filed its objections to Prosser's proposal that a "responsible officer" be appointed to manage the Prosser group's firms during the remainder of the bankruptcy process. That action came through the U.S. bankruptcy trustee, a departmental officer. The U.S. Trustee had petitioned the court to appoint a case trustee, a different sort of manager, to do the same job. (See "U.S. Justice Department Wants Trustee Appointed in Prosser Bankruptcy Proceedings.")
The federal trustee said, in effect, that there was no provision in the law for the appointment of a "Responsible Officer" — that the proposal would create another layer of cost without assuring a management independent of Prosser. In addition, the Prosser proposal that such an officer should be a "Virgin Islands Insider" would mean that the appointment would have to be made from a very limited pool of potential appointees, the trustee indicated. The trustee then reiterated its position that an independent-case trustee be appointed to manage the Prosser firms.
In Prosser's reply to the federal trustee's earlier motion for the appointment of a case trustee, he called for an alternative — the appointment of a "Responsible Officer" with these qualifications: "a person who is familiar with and well known to the Governor and the Governor-elect of the Virgin Islands, key decision makers within the current and incoming administrations, the Board of Trustees of the GERS, the Legislature of the Virgin Islands, the unions that represent over 450 employees of the subsidiary companies … the Public Service Commission and the public at large …."
It would be impossible for an "outsider … to effectively negotiate for the possible sale of infrastructure assets that are of such vital importance to so many in the Virgin Islands," Prosser's lawyers argued.
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