Monday, June 26, 2017

US Trustee says courts cannot appoint members of retiree committee 

By on May 19, 2017

SAN JUAN – The U.S. Trustee filed a motion Friday supporting the appointment of an Official Retiree Committee to represent the interests of pensioners in the bankruptcy petitions filed on behalf of the commonwealth and the Puerto Rico Sales Tax Financing Corp. (Cofina by its Spanish acronym), but objected a request by the Ad Hoc Retiree Committee to have the court appoint the group as its members.

The Trustee was answering a motion filed by a group called the Ad Hoc Retiree Committee, which comprises 17 organizations and individual retirees who on May 5 asked federal Judge Laura Taylor Swain to appoint an official committee representing retirees and them as its members. With a $46 billion liability, the commonwealth’s employee retirement system is expected to suffer cuts. There are more than 200,000 government retirees.

Assistant U.S. Trustee Monsita Lecaroz Arribas said the Trustee agrees that retirees should have an official committee and, therefore, does not oppose the appointment of a retiree committee.

“This case clearly needs a retiree committee and sooner rather than later. Given this situation and the comments of the Court and the various constituencies at the first day hearing, the United States Trustee intends to solicit for and to appoint a retiree committee. The United States Trustee expects to complete the committee solicitation process no later than June 16 and will hold one or more formation meetings as soon as possible after the solicitation is complete,” she said.

The Trustee, however, objected the motion to the extent it asked the court to appoint or direct the appointment of the alleged Ad Hoc Retiree Committee as an Official Retiree Committee because courts do not have that authority, she said.

Under the U.S. Bankruptcy Code, she said, appointing members of an official committee is a responsibility entrusted exclusively to the Trustee. “The Bankruptcy Code does not authorize a Court to direct the United States Trustee to appoint a pre-petition committee as the official committee or to appoint specific members to an official committee.

“Accordingly, that portion of the Motion must be denied. In filing this response, the United States Trustee does not suggest that members of the Ad Hoc Retiree Committee could not serve on an Official Retiree Committee (or any other official committee). But the law on committee formation must be followed,” Lecaroz Arribas said.

Adding that if the U.S. Trustee were to appoint the Ad Hoc Retiree Committee as members of the official retiree committee, it could be prone to challenges that the committee was unfairly chosen or does not adequately represent the group.

 

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