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US Trustee says Fund changes focus from the proper issue
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Posted on May 25 2012
The NMI Retirement Fund’s arguments in its opposition to the motions to dismiss its Chapter 11 bankruptcy case change the focus from the proper issue, according to the U.S. Trustee for the District of the CNMI.
In particular, Assistant U.S. Trustee Curtis Ching took issue with the Fund’s argument that it does not perform a “traditional government function.”
This contention incorrectly attempts to divert the legal standard away from whether the Fund is an “instrumentality” of the CNMI to whether the Fund is a “municipality,” said Ching in the Trustee’s reply to the Fund’s response to the motions to dismiss the bankruptcy petition.
The Fund’s objection, Ching said, overlooks the decision in the Pangelinan vs. Fund case in which the CNMI Supreme Court held that the Fund is a “governmental entity” that is entitled to sovereign immunity.
Ching pointed out that since only the sovereign can claim sovereign immunity, the CNMI Supreme Court’s ruling puts to rest the issue of whether the Fund is a “governmental unit” that is entitled to file for Chapter 11 bankruptcy.
Attorney Bruce Jorgensen’s group, the counsel for two unnamed retirees, first brought up the motion to dismiss on the ground that the Fund’s structure and statutory existence makes it a “governmental unit” of the CNMI.
The U.S. Trustee made a similar motion, followed by two retirees and members of the NMI Retirement, former Tinian senator Esteven M. King, the CNMI government itself, and the Commonwealth Ports Authority, all essentially citing the same grounds.
Fund counsel Braddock J. Huesman insists that the Fund is not a governmental unit and the federal court should not dismiss its Chapter 11 bankruptcy petition.
In the U.S. Trustee’s reply yesterday, Ching said the Fund is an “instrumentality of…a Commonwealth” and so is a “governmental unit” excluded from Chapter 11 eligibility.
Ching said the Fund serves a very basic governmental purpose—to fulfill the constitutional requirement of providing a retirement system for government workers.
“The CNMI created the [Fund] and enacted detailed legislation for the purpose of fulfilling Article 3, Section 20 of the CNMI Constitution. As such, it is instrumentality of the CNMI,” Ching added.
