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Fund’s broad request for immunity problematic
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Posted on Apr 23 2012
The United States Trustee asserts that the NMI Retirement Fund’s request for a broad injunction essentially granting the Fund and its employees immunity during the course of its Chapter 11 bankruptcy petition is “problematic.”
Assistant U.S. Trustee Curtis Ching told the U.S. District Court for the NMI during Friday’s hearing that they don’t believe it appropriate for the Fund to ask for an order prohibiting unauthorized actions against the Fund’s employees and its board during bankruptcy proceedings.
Taking this position, however, does not mean the U.S. Trustee is encouraging frivolous lawsuits that will distract from the important work at hand, hamper the reorganization effort, and further deplete the Fund’s limited resources, Ching said.
The U.S. Trustee, a component of the U.S. Department of Justice, protects the integrity of the bankruptcy system by overseeing case administration and litigation to enforce bankruptcy laws.
One of the Fund’s counsels, Jeremy Coffey, had asked the court to issue an injunctive relief against all persons from taking any legal action against the Fund’s board and its employees during bankruptcy proceedings.
Ching said that rather than an order that emphasizes certain portions of the automatic stay provisions, the Fund should resort to more common methods of notifying parties of the automatic stay in bankruptcy, such as notices of bankruptcy, suggestions of bankruptcy, and informal letters. Ching said the Fund retains its remedies for violations of the stay.
This bankruptcy court, Ching pointed out, can make itself available on short notice if a violation of the stay requires prompt remedial action.
As with other cases under chapters of the Bankruptcy Code, a stay of creditor actions against the Chapter debtor automatically goes into effect when the bankruptcy petition is filed.
U.S. Bankruptcy Court for the District of Hawaii Chief Bankruptcy Judge Robert J. Faris agreed with the U.S. Trustee’s position and denied the Fund’s motion.
