Palikir, Pohnpei - Chief Justice Andon Amaraich, on February 26, 2009 issued an amended order in aid of judgment in the civil action 2007-035 FSM Development Bank versus Pacific Foods and Services, Inc. and the individual defendants who secured two defaulted loans for the corporation. The court ordered that six parcels of land owned by Perdus Ehsa are to be sold and that the assignment of the lease parcel on which sits the Seabreeze Hotel and Red Snapper restaurant along with its improvements be assigned to FSM Development Bank.
All proceeds from the land sales will go toward the retirement of a judgment in excess of $2.2 million. Interest on the judgment is still accruing at the rate of $496.29 and no payments have been made on the 2007 judgment to date.
Because Pacific Foods and Services, Inc. recently filed for bankruptcy protection the order applies only to its officers, Perdus Ehsa, Timakio Ehsa, and Ellen Mae Ehsa.
By the Pohnpei State Constitution land cannot be sold except "by statute". A prominent Pohnpeian attorney said that the Pohnpei State Legislature passed the required statute when it passed the mortgage law several years ago. He said that it is that law that allows lenders like banks and other agencies to accept land collateral for loans. He said that according to the Constitution without that law loans could not be made using land as collateral in Pohnpei.
The Supreme Court defined the procedures for the land sales. The auction will take place through the submission of sealed bids to be delivered to the FSM Supreme Court in Palikir with the National Justice Ombudsman assigned as the responsible person for care and custody of the bid submissions. Bids may be submitted for one or more of the parcels of land.
A reserve price means that at least one bid must bid amongst all received would have to be above a certain pre-established minimum bid amount. The court ordered that there will be no reserve price for any of the parcels.
The order requires that public notice be provided at least 45 days in advance of the bid submission cutoff date in The Kaselehlie Press. The court requires radio broadcasts for 20 consecutive days in advance of the cutoff date and for ten consecutive days on cable televisions broadcasts. It also requires print advertisements to be placed in conspicuous public places such as the post office.
FSMDB has been assigned the responsibility for arranging for the public disclosures. All costs for advertising the sale are to be deducted from the auction proceeds after court approval.
The winning bidder will be notified by the Supreme Court and payment will be required by cashier's check within ten days of notification.
The defendants were given 30 days grace period after the February 26 order to pay the balance of the judgment in full. The order says that if the proceeds of the land sales are not enough to satisfy the $2.2 million judgment FSMDB will be allowed to seek modification of the order in aid of judgment to provide additional payments on the judgment.