Thursday, June 21, 2018

Contractor seeks to have Puerto Rico highway authority reject or accept contracts

By on July 12, 2017

SAN JUAN — The future of several infrastructure projects in Yabucoa, Cayey, Naguabo and for a highway between San Germán and Cabo Rojo is up in the air after Puerto Rico’s Highways & Transportation Authority (HTA) filed for bankruptcy.

In a court document filed July 10, Tamrio Inc., a Mayagüez-based construction company, stated that when the HTA filed for bankruptcy protection under Title III of the federal Promesa law May 21, the company had four executory contracts with the public corporation for certain federally funded projects.

According the motion, Tamrio seeks to “compel HTA to assume or reject” these contracts, within 21 days, due to the “high cost to perform that is incurred and assumed by Tamrio on a day to day basis.”

The company added that it incurs a weekly payroll of $33,988 in connection to the HTA projects, in addition to such expenses as materials, equipment rental and upkeep of construction machinery.

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An exhibit attached to the motion shows that the company works on nine HTA projects, at different stages of completion, for a total cost of $1.2 million.

Tamrio adds that the HTA is liable for the payment of the retainage of the executory contracts for about $551,000 and damages of some $2.3 million. “There is no certainty that HTA will be able to pay the amounts retained nor the damages and or claims arising out of the executory contracts,” the document said.

The motion also explains that executory contracts are those under which the obligations of both the bankrupt entity and the other party are so far unperformed that the failure of either to complete their duties would constitute a breach, excusing the performance of the other.

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