US Trustee also wants Fund Chapter 11 petition junked

The U.S. Trustee has asked the U.S. District Court for the NMI Bankruptcy Division to dismiss the NMI Retirement Fund’s Chapter 11 bankruptcy petition.

Assistant U.S. Trustee Curtis Ching echoed the position of two unnamed retirees represented by attorney Bruce Jorgensen that the Fund’s structure and statutory existence makes it clear that it is a “governmental unit” of the CNMI.

Ching said that under Title 11, a debtor must be a “person” in order to be eligible to file for Chapter 11 bankruptcy and may not, under the statutory definition, be a “governmental unit.”

“As such, the [Fund] cannot be a “person” for purposes of Title 11 and is therefore ineligible to be a Chapter 11 debtor. This case must therefore be dismissed,” Ching said in a 14-page motion.

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.

Jorgensen’s co-counsel, Margery Bronster, earlier sought the dismissal of the bankruptcy petition, arguing that the Fund is a “governmental unit” and an “agency of the Commonwealth” and is therefore not a “person” eligible to file the petition under the Bankruptcy Code.

As this developed, Ching appointed Friday seven persons as members of a committee of creditors holding unsecured claims: Roman Tudela, Mariano Taitano, Christopher Leon Guerrero, Sapuro Rayphand, Barbara Torres, Juan Cepeda, and Paul Joyce.

The Fund separately filed at least four motions over the weekend.

The Fund, through counsels Braddock J. Huesman and Jeremy B. Coffey, asked the court to issue an order setting July 31, 2012, at 5pm (Saipan time) as a bar date for the filing of proofs of claim against the Fund.

The Fund is also seeking a court order authorizing the retention and employment of the law office of Huesman as special counsel and designated counsel for the Fund in the bankruptcy case.

The third motion is an application for an order authorizing the employment and retention of Buck Consultants as an actuarial consultant for the Fund.

The fourth motion is for an order providing for the continued payment of certain benefits to certain retirees of the government and autonomous CNMI agencies, their survivors, and/or certain disabled persons.

The Fund counsel told the court that the intent of filing the Chapter 11 bankruptcy petition is to restructure the Fund’s obligation and not to shut down the agency.