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Charlotte Amalie
Wednesday, June 29, 2022
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Prosser Case Leaves Some Local Businesses on the Spot

Though you did real work or sold real goods, if you are one of the dozens of Virgin Islands businesspeople served papers demanding you return ICC money spent on Jeffrey Prosser’s behalf, get an attorney; the law may not be on your side.
ICC, which used to belong to Prosser, is in Chapter 11 bankruptcy. ICC owes its creditors the better part of a billion dollars. Required by law to try to recoup millions of dollars of company money misspent by ICC’s former owner Jeffrey Prosser for his own personal use, ICC’s court appointed Chapter 11 Trustee Stan Springel filed a slew of lawsuits in July and September. Of $35.8 million being sought for ICC’s creditors, $14.4 million is from companies, stores and individuals with V.I. addresses.
In many cases, money is being sought from banks and former employees. But Prosser also spent gigantic sums of ICC money on all kinds of ordinary goods and services, and the trustee is seeking those too.
Those in Springel’s sights include contractors paid by ICC for work on Prosser’s personal residence at Shoy’s Beach on St. Croix. Roofers, painters, masons, cabinet makers, pool contractors, air conditioning contractors, landscapers, plant nurseries, flower shops and drinking water trucking companies are all being hit up to return money given them by ICC for goods and services they provided Prosser.
One of those contractors is Carl Christopher, proprietor of Natural Builders and Quality Developers, whose company did work at Prosser’s Shoy’s Beach property.
"If they want their money back, they should take it out of the house," Christopher said. "That’s where it all is. We had a contractual arrangement for some of the concrete and masonry work, so whatever funds came through us, we can justify what it was for. It went into the building, through materials and wages and taxes we paid. It’s not like the money is still around. It is in the building now."
He said it’s offensive that the creditors are going after people who just performed work for pay.
"The suit makes us look like we are co-conspirators with Jeffrey Prosser somehow, with a plan to misappropriate funds that were allotted to him, when all we did was honest work for honest pay," he said.
Christopher said the creditors gave Prosser half a billion dollars without knowing what he was doing with the money.
"You’d think there would be some kind of expenditure plan before they handed over the first $100 million, how are you going to invest it, how are you going to pay it back."
Most of the other contractors being dunned would not speak for attribution but said off the record they basically agreed with Christopher’s assessment.
Yet, though it may seem unfair, the law may not be on the side of those contractors. Two independent bankruptcy law specialists, both with no prior knowledge of the details of the case, painted a fairly dire picture of the legal situation.
"This is a classic Dickensian example of when the law is an ass," said Jason Kilborn, assistant professor of law at John Marshall Law School in Chicago. "The trustee can say that regardless of their intentions, if the company gave you money and you gave nothing back to the company, and the expense … deepened the insolvency; that is what lawyers call ‘constructive fraudulent conveyance.’ That’s in lawyer speak of course, for it isn’t really fraud, but under the law it is. And the only defense that can really be put up is to challenge whether the company was actually insolvent at the time."
New York bankruptcy attorney Myles Alderman Jr. gave much the same bleak assessment.
"Say, if you were hired to do work for the president of a local business, to paint his house. And you’re given a check from not him but his company; do you say wait, this isn’t the right person?" Alderman said. Legally, to be safe, you should ask for payment from the person or business that is receiving the work. And a business owner has a fiduciary duty not to use company checks to paint his house.
"The reality is of course if you have someone who is going to defraud creditors, they aren’t going to care about their fiduciary duty," Alderman said. And many a contractor isn’t going to question when the owner of a company gives him a company check for private work.
Unfair as it seems, the trustee is legally bound to go after this sort of money.
"The law imposes on the management of an insolvent company a fiduciary duty to the creditors," Alderman said.
If the trustee chose not to file these claims, ICC’s creditors could actually sue the trustee and potentially go around the trustee and sue these contractors themselves, Kilborn said, echoing Alderman.
What should someone do? Get a lawyer, Kilborn and Alderman both said. One can sue Prosser for the money, they said, though that may not be very effective at this point. Those who performed work on Prosser’s property may be able to attach mechanics liens against the property for their costs, they said, recovering their money when the property is sold.
"The most likely resolution is the trustee will be realistic and settle on many of the smaller cases," Kilborn said. "He has to sue, but may not have to drive for every penny. So if a shop owner is able to offer something that isn’t laughable, there will be a settlement."
If it is likely to cost more to sue than the trustee is likely to ever be able to recover, he may allow some to be dismissed too, Kilborn said.
Bankruptcy judges have some leeway to decide what is equitable too, and there are many defenses against this type of claim, so it is very much in the interest of those being sued to get a lawyer and dispute the claims, Alderman said.
"What good judges do is basically act as circuit breaker," he said. "Equity courts give judges a fair amount of latitude."
But get a lawyer.

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Though you did real work or sold real goods, if you are one of the dozens of Virgin Islands businesspeople served papers demanding you return ICC money spent on Jeffrey Prosser's behalf, get an attorney; the law may not be on your side.
ICC, which used to belong to Prosser, is in Chapter 11 bankruptcy. ICC owes its creditors the better part of a billion dollars. Required by law to try to recoup millions of dollars of company money misspent by ICC's former owner Jeffrey Prosser for his own personal use, ICC's court appointed Chapter 11 Trustee Stan Springel filed a slew of lawsuits in July and September. Of $35.8 million being sought for ICC's creditors, $14.4 million is from companies, stores and individuals with V.I. addresses.
In many cases, money is being sought from banks and former employees. But Prosser also spent gigantic sums of ICC money on all kinds of ordinary goods and services, and the trustee is seeking those too.
Those in Springel's sights include contractors paid by ICC for work on Prosser's personal residence at Shoy's Beach on St. Croix. Roofers, painters, masons, cabinet makers, pool contractors, air conditioning contractors, landscapers, plant nurseries, flower shops and drinking water trucking companies are all being hit up to return money given them by ICC for goods and services they provided Prosser.
One of those contractors is Carl Christopher, proprietor of Natural Builders and Quality Developers, whose company did work at Prosser's Shoy's Beach property.
"If they want their money back, they should take it out of the house," Christopher said. "That's where it all is. We had a contractual arrangement for some of the concrete and masonry work, so whatever funds came through us, we can justify what it was for. It went into the building, through materials and wages and taxes we paid. It's not like the money is still around. It is in the building now."
He said it's offensive that the creditors are going after people who just performed work for pay.
"The suit makes us look like we are co-conspirators with Jeffrey Prosser somehow, with a plan to misappropriate funds that were allotted to him, when all we did was honest work for honest pay," he said.
Christopher said the creditors gave Prosser half a billion dollars without knowing what he was doing with the money.
"You'd think there would be some kind of expenditure plan before they handed over the first $100 million, how are you going to invest it, how are you going to pay it back."
Most of the other contractors being dunned would not speak for attribution but said off the record they basically agreed with Christopher's assessment.
Yet, though it may seem unfair, the law may not be on the side of those contractors. Two independent bankruptcy law specialists, both with no prior knowledge of the details of the case, painted a fairly dire picture of the legal situation.
"This is a classic Dickensian example of when the law is an ass," said Jason Kilborn, assistant professor of law at John Marshall Law School in Chicago. "The trustee can say that regardless of their intentions, if the company gave you money and you gave nothing back to the company, and the expense … deepened the insolvency; that is what lawyers call 'constructive fraudulent conveyance.' That's in lawyer speak of course, for it isn't really fraud, but under the law it is. And the only defense that can really be put up is to challenge whether the company was actually insolvent at the time."
New York bankruptcy attorney Myles Alderman Jr. gave much the same bleak assessment.
"Say, if you were hired to do work for the president of a local business, to paint his house. And you're given a check from not him but his company; do you say wait, this isn't the right person?" Alderman said. Legally, to be safe, you should ask for payment from the person or business that is receiving the work. And a business owner has a fiduciary duty not to use company checks to paint his house.
"The reality is of course if you have someone who is going to defraud creditors, they aren't going to care about their fiduciary duty," Alderman said. And many a contractor isn't going to question when the owner of a company gives him a company check for private work.
Unfair as it seems, the trustee is legally bound to go after this sort of money.
"The law imposes on the management of an insolvent company a fiduciary duty to the creditors," Alderman said.
If the trustee chose not to file these claims, ICC's creditors could actually sue the trustee and potentially go around the trustee and sue these contractors themselves, Kilborn said, echoing Alderman.
What should someone do? Get a lawyer, Kilborn and Alderman both said. One can sue Prosser for the money, they said, though that may not be very effective at this point. Those who performed work on Prosser's property may be able to attach mechanics liens against the property for their costs, they said, recovering their money when the property is sold.
"The most likely resolution is the trustee will be realistic and settle on many of the smaller cases," Kilborn said. "He has to sue, but may not have to drive for every penny. So if a shop owner is able to offer something that isn't laughable, there will be a settlement."
If it is likely to cost more to sue than the trustee is likely to ever be able to recover, he may allow some to be dismissed too, Kilborn said.
Bankruptcy judges have some leeway to decide what is equitable too, and there are many defenses against this type of claim, so it is very much in the interest of those being sued to get a lawyer and dispute the claims, Alderman said.
"What good judges do is basically act as circuit breaker," he said. "Equity courts give judges a fair amount of latitude."
But get a lawyer.