Judge dismisses Ambac’s claim against Puerto Rico highway authority
SAN JUAN – U.S. District Court Judge Laura Taylor Swain dismissed a complaint filed by Ambac Assurance Corp. against the Puerto Rico Financial Oversight and Management Board that sought to invalidate the Highways & Transportation Authority’s (HTA) fiscal plan and establish a lien on its revenues.
Judge Swain stated that the Promesa law prevents her from determining to invalidate the HTA’s fiscal plan and thus she has no jurisdiction over the matter.
She said Congress entrusted the ultimate decision to certify a fiscal plan to the island’s fiscal oversight board.
“Under Promesa’s statutory framework, it is only at the plan confirmation stage that the Court determines whether a proposed plan of adjustment complies with, among other things, the provisions of Title II of the United States Code which have been made applicable to these cases by Section 301 of Promesa and the relevant provisions of Promesa,” she said.
The court had heard arguments on Ambac’s request on Nov. 21. The bond insurer said it owns about $16 million in HTA-issued bonds in addition to insuring $53 million in revenue bonds, but that following the Moratorium Act, HTA stopped payments.
On the matter of HTA’s revenues, the judge said the issue was not “ripe” enough to determine whether Ambac’s money was taken.
On Feb. 28, 2017, the governor’s administration and the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF) submitted an initial fiscal plan to the fiscal oversight board, which it rejected on March 9, 2017, on grounds that it understated commonwealth spending.
On March 11, 2017, the administration and AAFAF submitted a revised fiscal plan, which the fiscal board vertified two days later. On or about April 28, 2017, the Legislature passed the Fiscal Plan Compliance Act to adapt local law in line with the plan.
On June 20 2017, AAFAF, on behalf of HTA, ordered the Bank of New York Mellon to “refrain from making the scheduled July 1, 2017 payment to the Bondholders” because it would constitute “an act to exercise control” over HTA’s property in violation of the automatic stay under bankruptcy.
“Plaintiff has failed to carry its burden here. Specifically, Plaintiff has failed to demonstrate that it has received a final decision from the state regarding any alleged taking of its property,” the Judge Swain said.