May 1, 2008 — U.S. District Court Judge Curtis V. Gómez ruled Thursday against three procedural appeals brought by Jeffrey Prosser, former CEO and owner of Innovative Telephone and said the matter in question should be handled by the U.S. Bankruptcy Court.
Prosser had sought to suspend enforcement of two decisions handed down by U.S. Bankruptcy Court Judge Judith K. Fitzgerald, who is handling the drawn-out case. On August 2, 2007, she had ruled that a proposed deal to settle all of Prosser debts for a marked-down price of $402 million had, in effect, died on July 31, 2006, when Prosser had been unable to pull together the financing for the payment; Prosser's lawyers had argued that the deadline did not count and that the $402 million deal was still alive.
The second decision involved Fitzgerald's ruling on Nov. 29, 2007, that Prosser's personal bankruptcy case was to be converted from the more debtor-friendly Chapter 11 of the federal bankruptcy law to the less debtor-friendly Chapter 7.
In his appeals, Prosser alternatively sought a temporary restraining order and a preliminary injunction from Gómez on the same issues; and finally he had sought an expedited hearing on these matters before Gómez. The judge ruled without a hearing, denying the Prosser motions based on documents submitted to him.
In a two-page order and a 20-page memorandum supporting the order, Gómez made no judgments about who owed how much to whom, dealing only with procedural issues.
Gómez pointed out that Fitzgerald had not yet ruled on the motion to suspend her decisions pending action on Prosser's appeal to the federal District Court, and hence it would have been inappropriate for the District Court judge to render a decision. Gómez' decision closed with the statement: "Indeed, the Court is certain that the Bankruptcy Court will address the pending motion to stay promptly."
The decision pushes aside three potential short-term roadblocks to the ongoing sales of Prosser's and Innovative properties but does not eliminate the substantive appeals that Prosser has made to the District Court.
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