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Judge Besosa consolidates suits filed by HTA bondholders to determine if Promesa stay should be lifted

By on September 27, 2016

 

A painting in the likeness of Judge Francisco Besosa is seen in this screenshot of www.prd.uscourts.gov

A painting in the likeness of Judge Francisco Besosa is seen in this screenshot of www.prd.uscourts.gov

SAN JUAN – Federal Judge Francisco Besosa on Tuesday consolidated the lawsuits filed by Assured Guaranty Corp. against the Commonwealth of Puerto Rico and by Peaje Investments against the Puerto Rico Highways and Transportation Authority (HTA) to determine whether a stay imposed by the Puerto Rico Oversight, Management and Economic Stability Act (Promesa) should be vacated.

Besosa set a hearing for Nov. 3 because of his court’s busy calendar.

Assured, a bond insurer that filed its lawsuit on July 21, complained that Gov. Alejandro García Padilla signed an executive order that diverted toll revenue pledged to support payment of bonds issued by the HTA.

Assured is seeking relief from the stay on litigation found in PROMESA, which President Obama signed at the end of June to stop the government from diverting the funds. Assured guarantees repayment on approximately $1.2 billion in HTA bonds.

Peaje Investments LLC, which is the the holder of more than $63 million in 1968 bonds from the HTA, says the agency had pledged toll revenues; gasoline, crude oil and diesel taxes; annual motor vehicle license fees; and investment earnings toward the payment of the bonds. However, it says Puerto Rico diverted these first to pay general obligation bonds and then to support its General Fund.

Promesa says the stay can be lifted for cause and if the plaintiffs show irreparable damage.

Besosa is slated to issue a ruling next month on whether four lawsuits filed by bondholders that are challenging the constitutionality of the island’s Moratorium Act should be allowed to move forward or whether to keep the stay imposed by Promesa in place. That stay expires in February.

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