April 9, 2007 — Jeffrey Moorhead, hearing examiner to the V.I. Public Services Commission, has made another attempt to force the federal bankruptcy process in the Jeffrey Prosser proceedings to bow to the territorial PSC.
On March 26, Moorhead filed a show-cause order that told the trustee appointed by the U.S. bankruptcy court "not to exercise any control over the management and operation of the public utilities in the U.S. Virgin Islands."
At the same time, he wrote: "I order the public utilities … not to permit the trustee to manage or operate the utilities in any manner."
It is not yet known how the trustee and the judge who appointed him will react to this order, but in previous clashes Moorhead (and the PSC) have not proven successful.
The trustee is Stan Springel, a West Coast businessman noted for work with failing companies. He was appointed to take charge of the Prosser properties by the Bankruptcy Court Judge, Judith K. Fitzgerald, who has presided over the Prosser bankruptcy proceedings for more than a year. Prosser is the owner of Innovative Telephone.
In the earlier conflicts, Moorhead first sought to reverse the appointment of Springel, partially on the grounds that the PSC had not been properly consulted as to his appointment. The trustee, an officer of the U.S. Department of Justice, had discussed the proposed appointment with Moorhead in his role as counsel to the PSC, but Moorhead argued that this was not appropriate — that the trustee should have consulted with the members of the PSC directly rather than with its lawyer.
The judge rebuffed this line of reasoning, saying that the appropriate way for lawyers to approach a party of interest who had retained a lawyer was to work through that lawyer — i.e. Moorhead. She then went ahead and appointed Springel. (See "Bankruptcy Court Gives Prosser Two Setbacks, Chastises PSC Counsel".)
Prosser's lawyers had appealed to the U.S. District Court in St. Thomas to block the appointment of a public trustee. Moorhead then asked Judge Fitzgerald to suspend the appointment until the District Court had ruled on the appeal, and again the judge ruled against Moorhead, saying that Springel should start his work immediately. Her order began with a series of whereas clauses critical of the way the PSC Counsel had handled communications with the federal judge.
In his recent order, Moorhead — citing Sections 43a and 313 of the V.I. Code — argued the need "to preserve the assets of the public utilities located in the U.S. Virgin Islands and ensure that they remain fully able to provide essential services …." He also said that the ruling of the bankruptcy court to appoint a case trustee has caused "a transfer of control … in disregard of Virgin Island(s) law."
Meanwhile Springel, presumably mindful of the litigious nature of the Prosser proceedings to date, has asked permission of the bankruptcy court to hire Hunton and Williams, a major law firm in Richmond, Virginia, to represent his interests in this case. Hunton and Williams last appeared in an unrelated set of cases representing Belize against Prosser's Central American ventures. The Source has learned that since then, the firm has opted out of its work on behalf of Belize to provide counsel to Springel.
As this matter moves forward, Springel and/or Fitzgerald is likely to discuss the supremacy clause in the constitution that gives the federal government precedence over state (and territorial) governments in instances in which both levels of government are concerned with the same subject matter.
To see the entire motion click here.
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