Muna: BoS receivership should be terminated now

The receivership placed on Bank of Saipan should be terminated now and that the dispute with the bank’s former receiver attorney Randall T. Fennell should be handled in a separate civil action, according to the current bank’s receiver Antonio S. Muna.

Muna, through counsel S. Joshua Berger, said the receivership should be terminated today “because the bank has earned it.”

“For this Court to allow the receivership to remain open because Fennell has been sued does not make sense,” said Berger in Muna’s pleadings filed in the CNMI Supreme Court in response to the Bank of Saipan Inc.’s appeal from a trial court’s order regarding the spending cap issue.

Berger said at the time Muna inherited the receivership in Sept. 2002, after less than a five-month tenure by Fennell, the situation was in chaos.

“It was contentious, litigious, with communications by most parties at a standstill,” the lawyer said, adding that Muna worked hard and successfully restored the bank to stability and liquidity.

Berger said Muna now joins the Bank of Saipan in its appeal because he believes that the receivership should be terminated and that the bank should be allowed to prosper, unburdened by the taint and expense of the receivership.

“Amazingly, notwithstanding all of its unhappy history, the bank has emerged as a viable, successful bank,” he claimed.

The bank, Berger pointed out, as managed by its board of directors and its new chief executive officer Jon Bargfrede, as well as its staff and their advisors and counsel, “have earned the right to the termination of the receivership.”

“The bank is in sound financial condition, profitability has been restored, the bank has more than sufficient capital, there is not one depositor opposing the termination and the bank funds are in no danger of being defrauded,” he said.

Berger said the dispute with Fennell can be resolved in the separate civil action, which is the more approximate forum.

The lawyer asked what is Muna’s protection if he gets sued.

“Certainly it is not to continue the receivership until his liability is determined. That would be ludicrous. Yet this is exactly what Fennell is seeking to keep the receivership open until the separate case against him is resolved or dismissed,” Berger said, adding that such is a wrong approach.

He said the focus should be on a plenary hearing for Fennell, as well as for all receivers, in a separate civil action.

“Fennell is being afforded an unfair advantage in defending himself against complaints of misconduct by being allowed to hold hostage the receivership,” he added.

In October 2005, Associate Judge Juan T. Lizama issued an order, stating that Bank of Saipan is not implementing reasonable cost controls in connection with the bank’s board of directors’ lawsuit against Fennell.

The judge ordered that the bank and its board, officers, agents, employees and attorneys, shall not expend any additional corporate funds in support of the board’s lawsuit against Fennell.

He gave the bank 45 days to submit to the court a plan detailing how the costs will be controlled.

Bank of Saipan appealed the spending cap order.

Fennell and his counsel filed motions with the high court to either confirm or declare their status as appellee, intervene, or grant them amicus curiae status.

The bank’s majority shareholders, Paul M. Calvo and Thomas J. M. Calvo, through counsel Michael W. Dotts, joined in the opposition submitted by the Bank of Saipan to the motions.

On Wednesday, CNMI Supreme Court Associate Justice Alexandro C. Castro denied the request of Fennell and his counsel to declare them as parties in the appeal.

In April 2002, the Commerce secretary shut down Bank of Saipan, concluding that the bank was insufficiently liquid to continue to meet depositors’ demands.

The bank was put into receivership and Fennell was appointed receiver. He served as receiver from April 30, 2002 until his discharge on Sept. 27, 2002.