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Prosser Objects to Naming of Chapter 11 Trustee

March 1, 2007 — Innovative Telephone owner Jeffrey Prosser has objected to the naming of a Chapter 11 trustee to manage his bankrupt holdings. Calling the nomination "absolutely mind-boggling," Prosser's objection stems from the nominee's prior connections to the creditors' attorneys.
The nomination was made by the Office of the United States Trustee, an arm of the Justice Department. The person selected was Stan Springel, managing director of Alvarez & Marsal, a San Francisco-based firm that concentrates on restructuring troubled companies.
An Internet search reveals that Springel has in the recent past been the $125,000 per month chief restructuring officer of McLeodUSA, a competitive mainland telephone company and had served earlier as CEO of U.S. Aggregates, a troubled firm then listed on the New York Stock Exchange.
The filing by the U.S. Trustee also indicates that Springel had served as chief restructuring officer at Radnor Holdings Corporation and at VarTec Telecom, Inc. In both instances, as well as that of McLeodUSA, law firms now active with Prosser's creditors had played roles vis-a-vis the creditors in those cases.
Prosser's objection said: "The United States Trustee's recommendation is absolutely mind-boggling in light of the disclosures contained in the trustee motion regarding the prior connections between Springel and Gregg Galardi, Skadden Arps … and Greenlight."
Greenlight and the Rural Telephone Finance Cooperative are the creditors who have brought Prosser into bankruptcy court. Skadden Arps, a major law firm in the bankruptcy field, represents Greenlight.
Presumably Prosser's objections, filed with the bankruptcy court, will also be contained in his appeal from the earlier decision of the bankruptcy court to have a Chapter 11 trustee appointed — an unusual, but not unheard-of, action by a bankruptcy court. That appeal is before the Federal District court in St. Thomas.
According to "Bankruptcy Basics," a publication of the Administrative Office of the United States Courts, a bankruptcy judge may call for the nomination of a Chapter 11 trustee by the U.S. Trustee. The appointment of such a person is subject to the approval of the bankruptcy court. Judge Judith Fitzgerald has asked for such a nomination but has not yet announced her decision on the nomination of Springel.
The current controversy over the past ties of Springel mirror another earlier battle in the courtroom over the past ties of an expert witness called by the creditors' lawyers. In that instance, Skadden Arps lawyer Gregg Galardi presented as an expert witness James Carroll, a Massachusetts-based certified public accountant. Prosser's lawyers challenged his credentials, saying that he had not worked as a CPA for years and that he had many relationships with Skadden Arps in recent years.
Allowing him to testify, Fitzgerald said, "Well, he knows more about these things than I do." But she said she would bear in mind his relationships with the creditors' attorneys as she weighed his testimony.
Carroll then testified that Prosser's receipt of loans that were not expected to be paid back should be reflected as income on his income tax returns; that line of testimony came up short, however, when Carroll said that the income tax returns shown to him by Prosser's lawyers had all the numbers eliminated.
The judge subsequently called for the appointment of an examiner to look into Prosser's financial reporting.
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March 1, 2007 -- Innovative Telephone owner Jeffrey Prosser has objected to the naming of a Chapter 11 trustee to manage his bankrupt holdings. Calling the nomination "absolutely mind-boggling," Prosser's objection stems from the nominee's prior connections to the creditors' attorneys.
The nomination was made by the Office of the United States Trustee, an arm of the Justice Department. The person selected was Stan Springel, managing director of Alvarez & Marsal, a San Francisco-based firm that concentrates on restructuring troubled companies.
An Internet search reveals that Springel has in the recent past been the $125,000 per month chief restructuring officer of McLeodUSA, a competitive mainland telephone company and had served earlier as CEO of U.S. Aggregates, a troubled firm then listed on the New York Stock Exchange.
The filing by the U.S. Trustee also indicates that Springel had served as chief restructuring officer at Radnor Holdings Corporation and at VarTec Telecom, Inc. In both instances, as well as that of McLeodUSA, law firms now active with Prosser's creditors had played roles vis-a-vis the creditors in those cases.
Prosser's objection said: "The United States Trustee's recommendation is absolutely mind-boggling in light of the disclosures contained in the trustee motion regarding the prior connections between Springel and Gregg Galardi, Skadden Arps ... and Greenlight."
Greenlight and the Rural Telephone Finance Cooperative are the creditors who have brought Prosser into bankruptcy court. Skadden Arps, a major law firm in the bankruptcy field, represents Greenlight.
Presumably Prosser's objections, filed with the bankruptcy court, will also be contained in his appeal from the earlier decision of the bankruptcy court to have a Chapter 11 trustee appointed -- an unusual, but not unheard-of, action by a bankruptcy court. That appeal is before the Federal District court in St. Thomas.
According to "Bankruptcy Basics," a publication of the Administrative Office of the United States Courts, a bankruptcy judge may call for the nomination of a Chapter 11 trustee by the U.S. Trustee. The appointment of such a person is subject to the approval of the bankruptcy court. Judge Judith Fitzgerald has asked for such a nomination but has not yet announced her decision on the nomination of Springel.
The current controversy over the past ties of Springel mirror another earlier battle in the courtroom over the past ties of an expert witness called by the creditors' lawyers. In that instance, Skadden Arps lawyer Gregg Galardi presented as an expert witness James Carroll, a Massachusetts-based certified public accountant. Prosser's lawyers challenged his credentials, saying that he had not worked as a CPA for years and that he had many relationships with Skadden Arps in recent years.
Allowing him to testify, Fitzgerald said, "Well, he knows more about these things than I do." But she said she would bear in mind his relationships with the creditors' attorneys as she weighed his testimony.
Carroll then testified that Prosser's receipt of loans that were not expected to be paid back should be reflected as income on his income tax returns; that line of testimony came up short, however, when Carroll said that the income tax returns shown to him by Prosser's lawyers had all the numbers eliminated.
The judge subsequently called for the appointment of an examiner to look into Prosser's financial reporting.
Back Talk


Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.