31 May 2012

Judge inclined to dismiss CNMI Retirement Fund case

8:00 am on 31 May 2012

The judge handling the Northern Marianas Retirement Fund's bankruptcy petition has issued a tentative ruling, saying he is inclined to dismiss the case.

Judge Robert Faris of the U.S. District Court says his ruling is based on the ground the Fund is a "governmental unit" and is not eligible for relief under Chapter 11 of the Bankruptcy Code.

A Chapter 11 bankruptcy petition allows a debtor to enter into an agreement with creditors under which all or a part of the business continues.

Judge Faris noted, however, that his tentative ruling is subject to further reflection and oral argument on Friday.

He says Congress did not intend the Bankruptcy Code to solve all problems, least of all the financial problems of governmental units.

He says the dismissal of this case will leave the Fund and its beneficiaries at the mercy of the Commonwealth government, but Congress intended that the elected branches of the local government, rather than a federal court, should address such problems.