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Oversight Board appeals ruling that barred it from intervening in several lawsuits against commonwealth

By on November 28, 2016

SAN JUAN – The Financial Oversight and Management Board has appealed a U.S. District Court ruling that stopped it from intervening in several consolidated suits filed against the government.
The board had filed a motion in October to intervene in four consolidated lawsuits in order to make known its views on the plaintiffs’ pending motions to lift the automatic stay imposed under Section 405 of the Puerto Rico Oversight, Management and Economic Stability Act (Promesa).
Two weeks ago, federal Judge Francisco Besosa denied the board’s request to intervene in the suits filed by U.S. Bank Trust, Brigade Leveraged Capital Structures Fund Ltd, National Public Finance Guarantee Corp. and the Dionisio Trigo group of bondholders.  The plaintiffs were challenging the constitutionality of the Moratorium Act, which stopped payments to bondholders.
On the other hand, Altair Global Credit Opportunities Fund also informed the U.S. District Court Monday that it had appealed a ruling earlier this month that upheld a stay in a lawsuit it filed against the government.
Judge Besosa on Nov. 2 upheld a block on creditors’ ability to file lawsuits against the government of Puerto Rico in an attempt to extract repayment on defaulted bonds to give time to the island to restructure its $69 billion debt load. The stay order was part of the Promesa Act that was signed by President Barack Obama on June 30 and which imposes federal oversight board to deal with Puerto Rico’s debt.

Besosa consolidated the lawsuit filed by Altair with the suits by three other claimants and imposed a stay on them.

“The Court hastens to add that the Commonwealth defendants must not abuse or squander the ‘breathing room’ that the Court’s decision fosters. The purpose of the PROMESA stay is to allow the Commonwealth to engage in meaningful, voluntary negotiations with its creditors without the distraction and burden of defending numerous lawsuits,” Besosa wrote.

Besides Altair, the lawsuit was brought by Peaje Investments LLC and Assured Guaranty Corp against the government and outgoing governor, Alejandro Garcia Padilla.

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