Sept. 20, 2007 — The court-appointed trustee in the bankruptcy case of Jeffrey Prosser, owner of Innovative Telephone, cited Prosser?s "lavish lifestyle" in a brief filed with the U.S. District Court in St. Thomas. The trustee also asked the bankruptcy court to make Prosser's case a Chapter 7 bankruptcy because of his continued failure to disclose his finances.
The issues before the U.S. District Court are Prosser's attempts to overturn on appeal two decisions by U.S. Bankruptcy Court Judge Judith K. Fitzgerald. The first rejects a $250 million reduction of the amount owed by Prosser and his companies. The second places the control of Prosser?s operating companies, such as Vitelco and the Daily News, in the hands of the trustee, Stan Springel, a West Coast business executive who has specialized in managing and selling distressed corporations.
(See "Prosser Appeals Latest Setback to Federal District Court" and " Judge Strips Prosser of Power Over Company Operations.")
Prosser?s lawyers had argued that the value of the properties in question would be lowered, and public services adversely affected, should Springel be allowed to control New ICC, the firm that runs Prosser?s operating companies. The Prosser brief suggested that such an action might endanger the franchises awarded by the Virgin Islands Public Service Commission, to, for instance, Vitelco.
In a brief filed last week with the court, Springel?s lawyers contended, "Prosser?s back door attack on the Control Order must not be viewed in a vacuum. While Prosser has been in control of New ICC, he has run up $10 million of unfunded pension liabilities… Instead of using the operating subsidiaries' cash flow to properly fund the pensions of the Virgin Islands? citizens employed by New ICC and its subsidiaries Prosser has failed to do so, while he continues to maintain his lavish lifestyle, including owning and maintaining numerous multi-million dollar estates (including those in Palm Beach and St. Croix), utilizing a 747 jet, employing chauffeurs and security details, and continuing his salary in excess of $1.4 million a year…
"If there is any irreparable harm likely to occur in these cases, it would result from allowing Prosser to continue to squander the assets of New ICC by staying the Control Order," they said.
Meanwhile, the bankruptcy case involving Prosser and his companies continues to move along in U.S. bankruptcy court.
Springel again complained to Fitzgerald that Prosser and his staff have not allowed him full access to Prosser's financial records despite a court order that he should have complete access. On Wednesday, Springel's attorney reminded the judge of her earlier order stating that if Prosser did not reveal his finances to the trustee his personal bankruptcy case would be converted from debtor-friendly Chapter 11 of the law to Chapter 7, which calls for a quick sale of a debtor's properties.
Springel's suggested that because of the failure to disclose finances, which he recounted in some detail, Prosser's case should be converted to a Chapter 7 case.
A telephone hearing is slated for Friday in bankruptcy court to debate two different motions, based on different legal arguments, calling for quick sale of the properties.
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