Thursday, April 18, 2019

Judge denies Puerto Rico GO bondholder request to create a committee

By on February 1, 2019

SAN JUAN – Judge Laura Taylor Swain has denied a request from a Puerto Rico general obligation (GO) bondholder residing stateside to create an Official GO Bond Committee that would fight government attempts to annul $6 billion in GO debt issued after 2012 because the request has to be directed to the U.S. trustee first.

At a recent omnibus hearing, Judge Swain had anticipated she was going to deny the request filed by Peter Hein, who had purchased the challenged bonds. The government is also attempting to annul leases issued by the Public Building Authority.

In her ruling Thursday, Judge Swain said she was denying Hein’s request without prejudice because it is up to the U.S. trustee to appoint creditor committees. Parties seeking the appointment of a committee should first make the request to the trustee before seeking an order from the court. If a party failed to do so, the court should refrain from ruling on any request until the trustee has considered it and determined not to appoint the additional committee, according to the ruling.

“Mr. Hein has not indicated that he has directed a request for appointment of an Official GO Bond Committee to the United States trustee. Accordingly, Mr. Hein’s request is denied without prejudice to his ability to (1) direct his request for appointment of an Official GO Bond Committee to the United States Trustee and, thereafter, (2) to file a motion seeking Court appointment of an Official GO Bond Committee,” Judge Swain said.

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