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Fiscal oversight board intervenes in lawsuits against HTA, Retirement Systems

By on October 28, 2016

SAN JUAN – Puerto Rico’s Financial Oversight and Management Board filed a request Friday to intervene in three bondholder lawsuits, two against the Puerto Rico Highway and Transportation Authority (HTA) and one against the Employees Retirement System (ERS).

“The Oversight Board is also entitled to intervene because it has an interest relating to the transaction (lifting PROMESA’s automatic stay) that is the subject matter of these actions; lifting the stay could impair the Oversight Board’s ability to perform its statutory functions; and the other parties to this litigation are not likely to represent the Oversight Board’s interest adequately,” the motion reads.

The board, created by the Puerto Rico Oversight, Management and Economic Stability Act, intervened in the three consolidated cases as it did on Oct. 21 in four other lawsuits from litigants who challenged the constitutionality of the Emergency Moratorium and Financial Rehabilitation Act.

The United States District Court for the District of Puerto Rico (CB photo/ Juan José Rodríguez)

The United States District Court for the District of Puerto Rico (CB photo/ Juan José Rodríguez)

The hearings on the three consolidated cases was slated to begin Nov. 3. One lawsuit was filed by Altair Global Credit Opportunities Fund and some 30 hedge funds against the Employees Retirement System. Peaje Investments and Assured Guaranty Corp. have both sued the government for diverting funds from the HTA.

The Altair case wants employees’ contributions to retirement to be put in a separate account for their benefit even though in the lawsuit filed Sept. 21, the plaintiffs said they intend to work with the board to manage Puerto Rico’s finances and renegotiate its public debt.

Before the board’s intervention, federal Judge Francisco Besosa had denied a government request for a continuance of the Nov. 3 hearing to allow the parties more time for the discovery. The government argued that after the court agreed to consolidate on Oct. 14, the lawsuit of Altair with the cases of Peaje and Assured, the movants in the Altair case haven’t

started the process of meeting-and-conferring about witnesses, exhibits or stipulations—neither

with the commonwealth nor with the plaintiffs in Peaje or Assured.

The government also argued that the continuance was going to give the board time to decide whether to intervene in the three consolidated cases as it finally did Friday.

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