Thursday, July 26, 2012

Judge Robert J. Faris approves fee applications in N. Marianas pension fund chapter 11 case

U.S. Bankruptcy Judge Robert J. Faris approved all fee applications relating to the Northern Mariana Islands Retirement Fund chapter 11 except for the request made by retiree Jack Angello.

Boston-based Brown Rudnick LLP, the fund's bankruptcy counsel, was approved for $488,822 which according to the firm was a 36 percent cut from their first interim fee application of $750K.

Honolulu-based Gelber, Gelber and Ingersoll was approved for its $75K legal fees.

Office of the U.S. Trustee in Hawaii sought reimbursement of $14,950 in costs.

The members of the creditors committee are to be reimbursed of $336.90 in costs.

Gelber's local counterpart, Atty. Colin Thompson gets $2,342.50.

The pension fund agency filed for chapter 11 protection on April 17 but was not allowed to proceed further when U.S. bankruptcy judge Robert J. Faris ruled that it was not eligible for Chapter 11 because it is a "governmental unit."

Prior to petition date, the Fund was seeking ways to resolve its underfunding crisis with the CNMI government owing more than $325 million in judgment obtained in 2009 over its failure to remit contributions.

The Fund, which according to projections, has only until July 2014, was told by local court judge Kenneth L. Govendo that the court would entertain motions for receivership if the parties could not come to an agreed-upon solution by June 15.

Meanwhile, in the federal court, there is a pending receivership case brought by anonymous retirees. Then District Court for the NMI chief judge Alex Munson issued a Colorado river stay that would allow the local court 60 days to exhaust all possible means to resolve the matter.

In Oct. 2011, the Ninth Circuit justices recommended that an Article III judge be assigned on the case to remove any possible conflicts of interest inherent among the local judges.

In the meantime, while the bankruptcy petition has yet to be dismissed, the CNMI governor Benigno R. Fitial issued an executive order on June 7 placing the Fund under a state of emergency.

The CNMI legislature has 60 days to reject the order. So far, the Senate decided to go reject the order but the House has yet to issue its position.

Now that Judge Faris has considered fee applications, he is now preparing to issue his written order to dismiss the Fund's chapter 11 petition.

The executive order kicks off once the case is dismissed.

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