Monday, January 23, 2017

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S&P500
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-6.11
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NASDAQ
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-2.39
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NYSE
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-22.164
-0.1980%
GOOG
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+14.29
+1.78%
YHOO
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AAPL
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AMZN
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FB
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BPOP
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EVTC
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OFG
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FBP
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US Court of Appeals for First Circuit rules in favor of Puerto Rico, maintains stay

By on January 11, 2017

SAN JUAN – The U.S. Court of Appeals for the First Circuit ruled Wednesday in favor of the Puerto Rican government in allowing the stay on litigation established by Promesa to continue in several creditor cases.

In its ruling, the Boston court upheld the district-level determination by federal Judge Francisco Besosa, who stayed the claims by several creditor groups against the Puerto Rican government, in which they allege the debt moratorium law implemented by the past administration is unconstitutional.

Plaintiffs – which include bond insurers, individuals and institutional mutual funds – who appealed Besosa’s decision are creditors of the Government Development Bank (GDB), Public Financing Corp. (PFC), Employee Retirement System (ERS) and Highway & Transportation Authority (HTA).

Specifically, the panel of judges upheld Besosa’s determination in the case of HTA creditors Peaje Investments, while dismissing as moot most of the appeals made by the other groups of plaintiffs.

However, in the case of Altair, an ERS creditor, the Boston court indicated that the plaintiffs are entitled to a hearing over their claim that Promesa’s stay be lifted. On the other hand, the appellate forum revoked Besosa and allowed the fiscal control board of Promesa to seek intervention in that lawsuit.

Although in some cases no evidentiary hearings were held, the parties had the opportunity to stipulate facts and designate from the transcript of previous hearings before Besosa last September.

Plaintiffs argue their rights are being affected because several revenue sources pledged for the payment of their bonds are being misused by the government through the moratorium legislation. They also demand that Promesa’s stay be lifted due to the damage they claim to be sustaining.

The Boston court’s decision represents a new victory for the government of Puerto Rico in the cases of creditors that currently remain suspended as allowed by Promesa. The government has been represented by the firm Kirkland & Ellis, which despite being considered by the administration of Gov. Ricardo Rosselló, wasn’t chosen as legal adviser to the new government.

The Puerto Rico Fiscal Agency and Financial Advisory Authority (Fafaa) announced Wednesday its selection of Dentons as new legal advisers to the Puerto Rican government.

(iStock photo)

(iStock photo)

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