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Judge Swain: Puerto Ricans face an even graver humanitarian crisis

By on September 26, 2017

SAN JUAN — On Tuesday, federal Judge Laura Taylor Swain postponed until further notice the Oct. 4 omnibus hearing on Puerto Rico’s bankruptcy cases under Title III of Promesa.

In her order, Judge Swain noted that “millions of American citizens whose U.S. home is Puerto Rico,” lack energy, water, food and fuel, among other basic services, following Hurricane María, which struck the island last week, leaving thousands without home and at least 16 deaths.

“These Americans, who were in the process of restructuring billions in debt through these PROMESA Title III proceedings in the hope of emerging from an economic crisis of unprecedented proportions, now face an even graver humanitarian crisis, one also that threatens their already challenging path back to economic stability,” Judge Swain said.

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

Due to the damages caused in Puerto Rico by Hurricane María, the government had asked the court to reschedule the Oct. 4 hearing to Oct. 18, as well as to extend several deadlines related to the omnibus hearing.

Judge Swain ordered that the October hearing be adjourned to “a date to be determined,” as the court will wait to receive input from all parties on when the hearing should be held. A Sept. 28 deadline was set to receive this information.

“In light of the extraordinary conditions in San Juan and until further notice, these adjourned hearings will take place in New York; every effort will be made to facilitate viewing from the San Juan courthouse,” the order adds.

Puerto Rico gov’t asks to reschedule bankruptcy hearing, extend deadlines

Prior to Hurricane María’s landfall in Puerto Rico, a hearing on one of the many adversary proceedings taking place in relation to the commonwealth’s Title III cases was postponed due to the emergency. The hearing over the commonwealth’s motion to dismiss an action filed by Assured Guaranty, a bond insurer, will now take place on Oct. 4 in New York.

“The Court hopes that Puerto Rico will benefit in the coming days from the delivery of substantial portions of the massive federal aid that is needed immediately, in supplies, expertise and services, to ensure the safety of American citizens living in Puerto Rico and their retention of the foothold they have established on the path to economic recovery,” Judge Swain added in her order.

The commonwealth, moreover, proposed that proceedings involving “limited or no factual issues” be decided by Judge Swain on the legal issues and with no delay. Nevertheless, those matters that involve “factual disputes” could be “temporarily delayed,” according to the commonwealth government. One such matter is the discovery processes that had just commenced as part of the island’s Title III bankruptcy cases.

“Due to the current circumstances in Puerto Rico, [the Financial Advisory & Fiscal Agency Authority, Fafaa] anticipates temporary difficulties in accessing certain physical documents and documents stored electronically that are required to respond to discovery requests. As such, [Fafaa] proposes a modest extension of up to four weeks for all discovery deadlines in these factual dispute cases,” the commonwealth’s Sept. 25 motion reads.

Counsel for different parties had already begun to issue subpoenas and requests for information as part of discovery processes, particularly on the key dispute over the ownership of sales tax revenues, or the so-called Cofina/commonwealth dispute.

Last Wednesday, Hurricane María made landfall in Puerto Rico, leaving thousands without homes, severe damage to infrastructure and virtually no power and telecommunication services.

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