Oct. 28, 2008 — Federal District Court Judge Curtis Gómez has handed Jeffrey Prosser, former owner and CEO of Innovative Telephone, yet another procedural setback in the bankruptcy controversy.
This is the third time that the same issue has been decided the same way by federal judges.
The issue is whether a settlement agreement between Prosser and his creditors, reached April 26, 2006, is still alive. It called for the payment, by July 30, 2006, of $402 million to settle the bankruptcy case.
Prosser did not raise the money by the date in question, but has contended that the deal is still alive — or, in the court's words, "assumable." The creditors say the deal died July 30, 2006, when the payment was not made.
First, after lengthy hearings, Judge Judith Fitzgerald — the U.S. bankruptcy judge sitting on the case — decided the nonpayment of the $402 million on the agreed-upon date killed the deal, making Prosser liable to his creditors for well more than $600 million. The second decision came May 30 when Gómez, hearing an appeal from Fitzgerald's ruling, ruled that she had made the right judgment.
Next Prosser appealed Gómez's decision to the Third Circuit Court of Appeals in Philadelphia. He also asked Gómez to stay (i.e., freeze) Gómez's own decision while the Third Circuit considered the matter.
In the most recent decision, on Monday, Gómez ruled against a stay of the earlier decision, meaning that two federal judges, on three occasions, have decided that Prosser's arguments were faulty.
More specifically, Gómez ruled that Prosser had little likelihood of winning the appeal, one of the standards used in deciding stay cases. He also said that a stay would, in effect, further delay an already long-lived trial, and would not serve the public interest.
But in the law courts, if not in baseball, three strikes do not mean you are out. Prosser still might win his appeal before the Third Circuit. In the meantime, the bankruptcy process goes on, as Fitzgerald deals with other issues and as the court-appointed trustees seek to sell the Prosser properties.
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