Govt to fight bankruptcy petition

The central government is planning to fight the bankruptcy petition filed by the NMI Retirement Fund in federal court, according to Fund lawyer Braddock Huesman yesterday.

Huesman said during yesterday’s board meeting that the Fitial administration has already communicated its plan to the Fund but he is confident that any motion to dismiss the case will not succeed.

The pension agency filed for Chapter 11 bankruptcy in the U.S. District Court on April 17 to allow it to restructure its obligations.

Press secretary Angel A. Demapan confirmed with Saipan Tribune yesterday the plan of the Fitial administration to fight the bankruptcy case.

“In the instant case, it is true that the Commonwealth, through the Office of the Attorney General anticipates filing certain pleadings which serve to challenge the pending bankruptcy petition,” he said, adding that the basis for this action will be evident in the pleadings themselves and that any preliminary comment would be “inappropriate.”

Demapan said that a formal case is expected to be filed within the next two weeks.

The Fund board’s legal team earlier described the reaction of the Executive Branch as “receptive” when they informed it of the bankruptcy filing a few weeks ago.

Gov. Benigno R. Fitial and Lt.Gov. Eloy Inos later expressed concern about the litigation cost the bankruptcy proceedings will incur the troubled agency, estimated to run in the millions.

A court judgment has determined that the central government owes the Fund about $317 million in unpaid employer contributions since 1999. Despite numerous efforts to collect from the government, nothing has succeeded, resulting in the Fund being forced to withdraw funds from its investment portfolio, which is now down to just over $250 million. To prolong the lifespan of the pension plan, the board filed for bankruptcy so it could reorganize the pension program.

“The Fund is confident that the current motion and any other motions to dismiss the case will fail. The central government has made their intention and communicated that they’re going to file. But we don’t believe those would be successful,” said Huesman yesterday, adding that the issue was thoroughly examined by the legal team and the board prior to the filing.

However, he pointed out that the final say still lies with the bankruptcy court, which is expected to render a decision on several motions at the June 1 hearing.

Two unnamed retirees have already filed a motion to dismiss the Chapter 11 bankruptcy case, to be decided by the bankruptcy court at its next hearing. They are represented by attorneys Bruce Jorgensen and Stephen Woodruff.

Huesman said that in the event the court dismisses this motion, the same motion that will be filed by the central government will become moot.

Meantime, Huesman said that the Fund does not intend at this time to file for other chapter petitions under the Bankruptcy Code despite the broad authority of Fund administrator Richard Villagomez.

Saipan Tribune learned that one of the motions adopted by the Fund board prior to the bankruptcy filing was to authorize Villagomez to file for other chapter petitions under the Bankruptcy Code if necessary.

According to Huesman, “The Fund reserves all its rights to use all legal remedies” but stressed that focus of the board right now is the Chapter 11 filing and its proceedings.

He said the board knows that “Chapter 11 is the best fit for the Fund at this time.”