This blog was granted permission to post this private response to Ruth Tighe’s On My Mind Column from 5/18/12. It provides a different take on the Chapter 11 Bankruptcy Filing:
A core function of the U.S. Trustee is to preserve the integrity of the U.S. bankruptcy system. I am surprised that you would elevate expediency (and the expediency of Fund trustees at that) over the rule of law by touting Chapter 11 as the only prospect for salvation for the Fund.
You are right that the Fund faces imminent disaster. But that disaster was entirely predictable. It was predictable 18 years ago [<-snip->] the unfunded liability of the Fund stood at $200 million and growing. From 1994 to 2000 [<-snip->] consistently warned that the unfunded liability would grow to $600 million. It most certainly was predictable three years ago when the NMIRF and the executive branch left no gun muzzled (and no expense spared) in their efforts to prevent appointment of a federal equity receiver.
If the Fund were actually an eligible debtor, it would have petitioned for bankruptcy three years ago instead of employing a cornucopia of delay tactics in the Roe/Doe litigation. If bankruptcy really was the only (or even merely the best) way to address what needs to be addressed, it should have been deployed three years ago when there was a lot more time to effect remedies before implosion. A big reason this did not happen (and why the NMIRF did not embrace appointment of a federal equity receiver and Federal court oversight) was that it is not what the Government of which the NMIRF is an instrumentality wanted.
Do you really think it is mere coincidence that the Fund chooses bankruptcy just when the CNMI runs out of ways to continue to stall the Roe/Doe lawsuit?
The present crisis is 100% the consequence of the addiction of Fund trustees and political “leaders” in the CNMI to expediency. Do you really believe the best prospect for a sensible, effective, fair and appropriate solution to the problem is to leave central authority and control in the hands of the same institutional actors as “Debtor-in-Possession”?
Ask yourself this question: What were the missing slides in the Funds pre-petition presentation?
Where was the slide that would show the effect of capping retirement benefits at $50,000 per annum?
Where were the slides showing all the benefit enhancements enacted by the Legislature since inception of the NMIRF without funding, and the effect on the Fund of removing each of these enhancements from benefit computation?
Where was the slide showing the effect on the fund of removing the 30% ” ‘early’ retirement bonus” from the benefit computation, particularly since only some — not all — recipients of this bonus got a benefits enhancement from it?
I am sure we could come up with some more slides that should have been produced, e.g. the selective enforcement of the anti-double dipping rule, the negligible benefit to the Fund of so-called overpayment recoveries, the negative effect on Fund life expectancy of it expenditures on attorney fees in the past five years, etc..
Generally, I am not in favor of pursing recovery of funds already disbursed, except disgorgement of fees collected by professionals counseling (and helping execute and defend) frivolous and foolish courses of action.
The remedies affecting Fund members, retirees, and their families should be prospective only, not retrospective and punitive.
Regards (all the best),