Ambac resorts to court for sales tax info it says Puerto Rico isn’t providing
SAN JUAN – Ambac Assurance Corp., which insures some $1.35 billion in Puerto Rico Sales Tax Financing Corp. (Cofina) bonds, has asked the U.S. District Court to allow it to examine the collection of the sales and use tax (IVU buy its Spanish acronym) under Bankruptcy Rule 2004 so it can evaluate restructuring proposals for the in-court bankruptcy process underway.
“Without the information sought, Ambac cannot participate meaningfully in the process of advancing these Title III cases towards successful plans of adjustment,” the insurer said. “Ambac accordingly seeks an order from this Court compelling the [Financial] Oversight Board, AAFAF [Spanish acronym for Fiscal Agency and Financial Advisory Authority], the Commonwealth, and Cofina to produce this information.”
In a motion submitted Tuesday, Ambac said that besides destroying the island’s infrastructure, Hurricane María also impacted IVU collections after hitting Puerto Rico on Sept. 20.
María led to a decrease in business activity and prevented the collection of the IVU. As a result, Gov. Ricardo Rosselló issued an executive order suspending its collection from small and midsize businesses.
The bond insurer said it has sought information from the fiscal board, AAFAF, the local government and Cofina to understand how the collection of the tax had been affected by María, but that none have provided the information and are refusing to cooperate.
The firm wants information pertaining to how the depressed business and consumption after the storm as well as the executive order hindered IVU collections so it can make “an informed decision on any restructuring plans.”
The Federal Rule of Bankruptcy Procedure 2004 states that the court may order the examination of any entity.