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Prosser Seeks to Slow Sale of Properties

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March 27, 2008 — Jeffrey Prosser, former owner and CEO of Innovative Communications Corp., has filed a flurry of legal motions seeking to delay, or reverse, the ongoing efforts to sell his properties to pay his debts.
All the motions are before U.S. Bankruptcy Judge Judith Fitzgerald, who has ruled in his favor recently on some of the lesser issues, such as a question related to his wardrobe.
Prosser is in Chapter 7 bankruptcy and ICC — parent company to Vitelco, Innovative Cable, TV Channel 2 and other local companies — is in Chapter 11.
Prosser's major maneuver is an attempt to get Judge Fitzgerald to issue a stay, or restraining order, to freeze the ongoing bankruptcy proceedings until such time as the federal District Court in St. Thomas rules on his appeals from Judge Fitzgerald's earlier rulings; the bankruptcy judge has refused to grant such a stay in the past.
The Prosser camp will, they say, "suffer irreparable harm if a stay or an injunction is not granted as exemplified by the previous sale of assets and the sweetheart sale of Virgin Island (sic) Community Bank for far less than market value."
In addition to that blanket effort to delay the proceedings, Prosser's lawyers have filed a series of specific objections to various sales now in the works. For example:
– Prosser's lawyers argue that the Lake Placid (N.Y.) residence should not be sold because, they say, it belongs to Prosser together with his wife, Dawn Prosser, and is thus not part of the bankruptcy proceedings;
– Prosser objects to the Chapter 11 Trustee, Stan Springel, retaining Gem Auction to sell various items saying that they, too, are not covered in the bankruptcy;
– Prosser objects to the sale of the stock of the Virgin Islands Community bank (in a motion separate from the attempt to obtain a stay) on the grounds that the price is too low;
– Similarly, Prosser filed yet another paper, objecting to the proposed sale by Springel of real estate at 143 Ann's Hope, St. Croix, on the grounds that the price was not right.
In another action, Dawn Prosser, using her new lawyer, Karin A. Bentz of St. Thomas, has filed a brief supporting her right not to answer some questions, saying that they might tend to incriminate her, and thus her use of the Fifth Amendment was appropriate. Jeffrey Prosser has previously refused to answer a series of questions about his holdings, also citing the Fifth Amendment.
Fitzgerald, in two separate orders, ruled partially in favor of Prosser and his family. In one instance, she granted a 20-day delay to the Prosser children; they must produce a series of documents on the ownership of certain valuables, but instead of a March 10 deadline, they now have a March 30 deadline.
In the second ruling, the judge agreed to hear evidence on whether or not "certain Frescos" in Prosser's Palm Beach residence are removable and thus saleable separately, or whether they are a fixed element within the house. This ruling starts with the following firm statement from the judge: "Debtor [i.e., Prosser] alleges that the court entered the order submitted by the Trustee. The court did no such thing."
Later in the order the judge extended to April 15 the deadline for Prosser to submit an inventory of his wardrobe and to select the 14 suits, the 14 pairs of dress shoes, and the 14 sports outfits that he has been allowed to keep. The rest of the wardrobe is to be sold to help meet the debts of Prosser and his former companies. ( See "Brief: Legal Wrangling Over Prosser's Wardrobe Provides a Spirited Sideshow.")
In previous hearings the lawyers for creditors complained that Prosser's corporations spent hundreds of thousands of dollars of corporate money paying Prosser's credit card bills at pricey retail establishments such as Manhattan's Bergdorf Goodman.
Meanwhile the lawyers come and go. Every hiring, and every resigning, of a lawyer in a bankruptcy case happens only with court approval, the filling of extensive papers, and the opportunity for Lawyers A, B & C to object when Lawyers X, Y and Z are proposed. Recent filings have shown these movements:
Coming: Springel, in order to complete a series of real estate transactions, wants to add to his stable of lawyers Gerald T. Groner, a Christiansted attorney said to have more than 25 years' experience practicing real estate law in the Virgin Islands.
Going: Both Alan Pedersen, an attorney in Omaha, and Thomas F. Friedberg, a St. John-based lawyer, have asked the court's permission to withdraw as counsel to the four Prosser children (Justin, Sybil and Lyndon Prosser, and Michelle LaBennett).
The grounds, both lawyers say, are that: "…the Prosser Children have failed to pay the attorney's fees due and have also failed to maintain communication with counsel … necessary for proper representation."
Waiting in the wings: Springel wants to use the Virginia-based Hunton & Williams as his co-counsel; the Greenlight Companies, one of the major creditors, objects on the grounds of needless additional expense; this issue, which has been brewing for months, was discussed at the last hearing, on March 18, but not resolved.
The next hearing on the case will be in Pittsburgh on April 11.
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