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Hearing set in Peaje suit against Puerto Rico Highways Authority

By on June 1, 2017

The U.S. District Court of Puerto Rico. (Juan J. Rodríguez/CB)

FAJARDO, Puerto Rico – U.S. Bankruptcy Judge Laura Taylor Swain scheduled a hearing for Monday, June 5, during which she will address a request for expedited discovery and temporary restraining order filed May 31 by Peaje Investments against the Puerto Rico Highways & Transportation Authority (HTA).

The creditor group is requesting that the HTA resumes the transfer of toll revenues that secure repayment of its bonds and meet upcoming debt-service payments.

The hearing, which is slated to begin at 2 p.m., will be held both in the U.S. District Court of Puerto Rico in Hato Rey and in Courtroom 17-C of the U.S. District Court for the Southern District of New York. According to the hearing order filed Thursday, Judge Swain will be present in the New York courtroom and video-teleconferencing facilities will be available in San Juan. Counsel have until Friday, June 2, to notify in which courtroom they intend to appear, as well as to file any motion opposing Peaje’s request.

Peaje sues to prevent Puerto Rico Highway Authority default

Peaje, which owns $65 million in uninsured bonds issued by the HTA, asked the court this week for a restraining order as part of a separate adversary proceeding filed in the public corporation’s debt-restructuring case. It also filed an adversary proceeding in the commonwealth’s bankruptcy case under Promesa’s Title III.

“The action concerns HTA’s and its Executive Director’s ongoing taking and dissipation of Plaintiff’s collateral in violation of applicable law. Plaintiff is the holder of certain bonds secured by a valid, enforceable, first-priority lien on certain toll revenues that HTA collects in its operations,” the lawsuit reads. It adds that, “as a result of the ongoing diversion,” there would be “insufficient funds to satisfy the entire payment of principal and interest due on the bonds in July.”

Peaje is also asking the court to prevent the commonwealth and the Puerto Rico Fiscal Agency and Financial Advisory Authority (Fafaa) from interfering with HTA’s obligation to transfer pledged toll revenues.

Over the past year, the commonwealth has been retaining, or clawing back, several pledged revenue streams, including toll revenues, to cover operations and essential services amid the island government’s cash crunch.

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