Fourteen years ago, from a front-row seat covering the CNMI Retirement Fund’s attempt to file for Chapter 11 bankruptcy, I watched retirees navigate a maze of legal twists and turns.
In April 2012, U.S. Bankruptcy Judge Robert J. Faris dismissed the Fund’s petition despite fierce arguments from its counsel and retirees. Bound by Congress’s eligibility criteria, Faris ruled that the Fund was an "instrumentality" of the local government and thus ineligible for protection. He reached his decision reluctantly, calling the treatment of the pension fund and its retirees “shameful.” His ruling left no victors—only a collective setback and a call for an amicable resolution.
In the aftermath, stakeholders debated appeals and alternative strategies. Retirees soon pivoted, throwing their support behind Betty Johnson’s federal lawsuit seeking receivership for the fund. Because vacant board seats had left the Fund incapacitated, the court appointed a trustee ad litem. By October 2013, the case closed: retirees reluctantly accepted a temporary 25% benefit cut, while the CNMI government agreed to a $779 million consent decree if it defaulted on its obligations.
To meet those obligations, the local government bet on gambling. License fees from Best Sunshine injected quick cash into the Settlement Fund, delaying the insolvency experts had long warned was inevitable.
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