June 3, 2008 — A negotiated settlement of Jeffrey Prosser's bankruptcy case for $402 million is no longer valid, a federal judge ruled Monday.
Lawyers for the former Innovative Telephone CEO had said the deal was still potentially viable — or "assumable" in the court's language. Prosser had appealed a decision by U.S. Bankruptcy Court Judge Judith K. Fitzgerald invalidating the settlement on the grounds that Prosser failed to meet the deadline for payment.
On Monday, Federal District Court Judge Curtis V. Gómez ruled that Fitzgerald was correct: that the settlement was, in fact, dead. This leaves the amount owed in excess of $600 million.
Fitzgerald plays the role of a trial judge, and grinds out a dozen or so Prosser-related rulings a month on matters great and small. Gómez sits — in bankruptcy cases and some others — as an appeals judge and has issued relatively few rulings in the Prosser proceedings.
In this instance, Gómez found: "Here the settlement agreement is facially unambiguous. The agreement makes clear that 'if … the payment is not made on or before [July 31, 2006], then effective on August 1, 2006, [it] shall become void ….'"
There have been several other recent developments in the Prosser bankruptcy case.
The Rural Telephone Finance Cooperative, the specialized non-profit bank that served as Prosser's banker for years, filed a motion with the bankruptcy court on June 2 seeking sanctions against Prosser's lawyers for making "outrageous and unfounded claims." That, for example, RTFC "materially and unilaterally altered one or more of the loan documents upon which its claims … are based by removing and substituting pages without the knowledge or consent of the debtor [Prosser]."
The RTFC lawyers vehemently denied that this had happened.
The degree to which these proceedings have involved numerous lawyers is reflected by the inclusion, at the end of this motion, of a three-page-long list of lawyers involved in the case, all printed in small-face type. The list includes 44 law firms and 58 individual lawyers in those firms.
On May 28, Fitzgerald issued a procedural ruling against Prosser denying a stay (postponement) of various ongoing bankruptcy actions until the district court had ruled on appeals from her rulings.
Fitzgerald also issued orders confirming sales of the V.I. Daily News for $5.25 million and of a painting by Camille Pissarro for $4.1 million.
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