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Commonwealth Must Answer Suit Despite Stay Imposed by Promesa, Federal Judge Says  

By on July 11, 2016

SAN JUAN – U.S. District Court Judge Francisco Besosa gave the government until July 26 to answer a complaint filed by National Public Finance Guarantee to invalidate the Puerto Rico Emergency and Financial Rehabilitation Act despite a stay on suits imposed by the Puerto Rico Oversight, Management and Economic Stability Act, or Promesa.
Besosa denied a government request for a 10-day period to answer the complaint from the time it decides whether National’s claim was impacted by Promesa.
National sued on June 15, and on June 22 filed a motion for summary judgement. The government had until Monday to answer the complaint.  
After President Obama signed Promesa on June 30, the government sought an automatic stay on the lawsuit.
On July 8, the court entered an order stating that without full briefing by all parties, it was not going to acknowledge that the litigation has been temporarily stayed by Promesa and ordered the government to respond to the notice no later than July 18.
The government replied that requiring them to address the merits of the suit while the applicability of Promesa on National’s claim was being decided would frustrate one of the express purposes of the law, which is to give the government a limited period of time during which it can focus its resources on negotiating a voluntary resolution with its creditors instead of defending numerous, costly creditor lawsuits.  
Besosa denied the request but gave the government additional time to answer the complaint. “No additional extensions will be allowed,” Besosa said.

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