Members of the NMI Retirement Fund board of trustees and its legal team, including a newly hired bankruptcy counsel, advised retirees and members of the Commonwealth pension agency not to panic in the wake of the Fund\u2019s Chapter 11 bankruptcy filing yesterday.<\/p>\n
This came even as the board said that all payouts that would impact the Fund\u2019s assets will now depend on the decision of the bankruptcy court, which may freeze the plan\u2019s assets.<\/p>\n
In a hastily called news briefing mid-afternoon yesterday at the Fund\u2019s conference room, board chair Bernardita Palacios said their goal in filing for Chapter 11 bankruptcy is actually to preserve the Fund\u2019s ability to distribute payments beyond 2014, which is the projected lifespan of the program based on its current portfolio of only over $250 million.<\/p>\n
She said the recent creation of a pension holding corporation will allow it to serve as an \u201cemergency reserve account,\u201d which currently holds two months\u2019 worth of pension for retirees and two months\u2019 worth of premium for health and life insurance of retirees. After these two months, the Fund will ask for the continued payout of benefits from the bankruptcy court.<\/p>\n
Newly hired bankruptcy counsel Jeremy B. Coffey said the Fund intends to use all means provided by the federal court to recover amounts due from all sources, including the central government, which owes the Fund an estimated $317 million in employer\u2019s contribution.<\/p>\n
Coffey said the bankruptcy filing is constitutional as Chapter 11 is designed to facilitate the restructuring of the Fund\u2019s obligation and ease its financial distress. He said the Fund is in dire financial distress and it needs to be addressed with the ultimate goal of prolonging its existence.<\/p>\n
Viola Alepuyo, the board\u2019s legal counsel, said the bankruptcy filing will give retirees a stronger voice, compared to the receivership option that has also been brought up in recent past. <\/p>\n
She defined receivership as a \u201cliquidation,\u201d which the board rejects, choosing instead the path of \u201crestructuring and reorganization.\u201d <\/p>\n
\u201cThe board felt that receivership is more akin to liquidation. The goal is not to liquidate the Fund but to restructure the obligation so that we can pay the benefits for as long as possible. So today\u2019s decision is really to protect those benefit payments and to find ways how to collect what is owed the Fund,\u201d said Alepuyo.<\/p>\n
When asked how long the bankruptcy period will last, both lawyers responded that \u201cthere is no definite timeframe\u201d but the intent is to get out as quickly as possible\u2014probably in six months. However, they noted that there are things outside the Fund\u2019s control that may occur within that period. Their immediate plan is to engage with creditors and retirees so they can start work on a strategy that will be presented to the bankruptcy court.<\/p>\n
The legal team assured that the Fund\u2019s operation is business-as-usual, with the board of trustees, money managers, and consultants retained in place. Investment strategies will continue for the growth of the portfolio, they said.<\/p>\n
[B]Railroaded decision[\/B]<\/p>\n
Responding to claims that the board railroaded its decision to file for bankruptcy, Alepuyo said this is not true as the issue had been on the board\u2019s table for a long time now. <\/p>\n
She revealed that before the bankruptcy decision was made, the Fund filed a motion for equitable relief with Superior Court associate judge Kenneth Govendo, asking him to make the decisions that will ensure the Fund would last beyond 2014. The judge declined to do so, saying he has no authority over the matter. Instead, Govendo recommended some remedies for the Fund to consider, including the receivership option.<\/p>\n
Alepuyo said the board approved the bankruptcy option in previous board meetings as one of its litigation strategies. She said it took the board at least 69 months looking for legal remedies to the crisis.<\/p>\n
Alepuyo said the Fund hired Coffey as its bankruptcy counsel after finding it difficult to hire one on island and in the Pacific. She said the initial rate offer for his service was $1,000 per hour, which then dropped to $475 per hour. That rate is still up for court approval.<\/p>\n
During the bankruptcy period, Alepuyo encouraged lawmakers to continue working on bills that would help fund the pension program because it will help convince the court to remove the Fund from bankruptcy.<\/p>\n","protected":false},"excerpt":{"rendered":"
Members of the NMI Retirement Fund board of trustees and its legal team, including a newly hired bankruptcy counsel, advised retirees and members of the Commonwealth pension agency not to panic in the wake of the Fund\u2019s Chapter 11 bankruptcy filing yesterday.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-160528","post","type-post","status-publish","format-standard","hentry","category-local-news"],"_links":{"self":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/160528","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/comments?post=160528"}],"version-history":[{"count":0,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/160528\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/media?parent=160528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/categories?post=160528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/tags?post=160528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}