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Prosser Bankruptcy Case Makes V.I. Debut

Feb. 6, 2007– The latest hearing in the bankruptcy case involving Innovative Communications Corp. (ICC) owner Jeffery Prosser finished in less than three hours Tuesday, as U.S. Bankruptcy Court Judge Judith K. Fitzgerald did not issue a decision on a motion filed by Prosser's creditors to return the venue of the case to Delaware, where it was originally heard.
However, Fitzgerald said she would be issuing rulings on at least five pending motions — including the selection of a court-appointed case trustee — by Feb. 14.
Tuesday's hearing, in District Court on St. Thomas, was the first in a long series of bankruptcy hearings to actually take place in the territory. Prior hearings had all been conducted in the Northeast, in either Wilmington, Del., or Pittsburgh, Pa.
On Tuesday, Gregg Galardi, representing Greenlight Companies (one of Prosser's creditors), said the discovery of "new evidence" has led the creditors to ask Fitzgerald to reconsider her decision to move the venue of Prosser's bankruptcy cases from Delaware to the U.S. Virgin Islands (See "Judge Grants Change of Venue for Prosser Bankruptcy Cases").
After hearing arguments by both Galardi and Carol Rich, representing ICC, Fitzgerald said she would take the motion to reconsider the ruling under advisement.
A second motion, brought forth by the debtors, called for the court to issue sanctions against the Rural Telephone Finance Cooperative (RTFC) for the alleged violation of a bankruptcy protection order.
"When a person files for bankruptcy, there's something called an automatic stay, which prevents anyone from taking action or foreclosing on the property of the debtor," explained attorney Michael Lichtenstein, representing Prosser. "The court would have to lift that stay in order for a foreclosure to happen."
Lichtenstein argued that RTFC, Prosser's longtime lenders, violated the stay by "impeding" ongoing negotiations between ICC and the V.I. government relating to the possible purchase of Vitelco and other Innovative entities.
Lichtenstein added that after filing a motion to lift the automatic stay, RTFC issued a "false" press release, along with a letter to PSC chairwoman Alecia Wells. "The letter to the PSC falsely states that judgments have been entered in RTFC's favor, following defaults on the loan," he said. "RTFC didn't consider the impact that letter would have on the negotiations."
Frustrated by the back-and-forth between the two sides, Fitzgerald ordered the parties to take a 10-minute break to "try and resolve the issue."
After the recess concluded, William Grenndyke, representing RTFC, said "Nothing has happened that would show that there was any violation. We filed a motion to lift the stay, and we told the whole world that we did it."
After the discussion concluded, Lichtenstein announced that Prosser's camp had decided to withdraw the motion with prejudice, meaning that they would not be able to file the same motion at a later date.
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