Thursday, July 20, 2017

Developments after 1st Title III bankruptcy hearing in Puerto Rico

By on May 18, 2017

SAN JUAN – The following are some of the most important developments during the first hearing on the bankruptcy petitions for the commonwealth of Puerto Rico and the Sales Tax Financing Corp. (Cofina by its Spanish acronym) before Judge Laura Taylor Swain.

  • The federal judge approved most of the motions for case management, but with amendments requested by the creditors. Despite the complaints of Cofina bondholders, she agreed to consolidate all claims under the lead claim of the commonwealth for administrative purposes only, allowing claims to continue to be filed on other dockets.
  • The U.S. trustee said it will object to the creation of a committee to represent the interests of the retirees.
  • Attorney Martin Bienenstock anticipates that the fiscal oversight board is preparing to file Title III for the Highways and Transportation Authority (HTA), and officials said other entities will follow.
  • Judge Taylor Swain did not rule on a motion by Bank of New York Mellon, Cofina’s trustee, on how to proceed with the payment of $16.3 million to be paid June 1 despite the lawyer’s insistence. The judge also did not rule on a request for an order to compel suppliers of utilities to continue to provide service.
  • Lawyers representing Cofina raised the issue that their interests are not protected because the fiscal board as well as the Puerto Rico Fiscal Agency and Financial Advisory Authority (FAFAA) are also representing the interests of general obligation bondholders. The GOs are disputing the legality of Cofina and want sales and use tax revenue to be used to pay them.

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