Nearly 6,000 Lawsuits against commonwealth Pending for 2017
SAN JUAN – Unless the Puerto Rico government is able to get an extension when the stay on creditors’ lawsuits expires in February or renegotiates its debt, the island will be buried in litigation throughout 2017.
To date, the commonwealth is a defendant in some 5,192 lawsuits pertaining to matters incidental to the performance of its operations and debt default. As of June 30, 2016, the commonwealth has listed reported liabilities of about $2.2 billion for awarded and anticipated unfavorable judgments, which would require significant financial resources. The amounts claimed as of June 30, 2016 exceed $10.9 billion.
Besides litigation involving unpaid police wages or the $800 million claim in Medicaid “wraparound payments,” just to mention a few, the government has been sued by numerous creditors after defaulting on some of its nearly $70 billion debt load. Most of the lawsuits have been stayed.
The Financial Oversight & Management Board (FOMB), which handles the island’s affairs, has said it will attempt to renegotiate the debt. The government of Puerto Rico has already asked the Board for an extension to May 2017 of the stay that expires Feb. 15, 2017.
The First Circuit Court of Appeals kept the stay imposed against several litigants by the Federal Court that was established by the Puerto Rico Oversight, Management & Economic Stability Act, known as Promesa, but ordered a hearing in the case of Altair Global Credit Opportunities Fund. However, a hearing slated for Friday with the the Altair plaintiffs was vacated after an agreement was reached between the parties, according to the docket in federal court.
The Altair plaintiffs were seeking a protection of the Commonwealth Retirement System employees contributions that were used to back up their bonds.
An order issued by Judge Francisco Besosa on Wednesday states that the both sides stipulated that all Employers’ Contributions (as defined in the ERS Bond Resolutions) received by the ERS during the pendency of the Promesa stay would be put in a separate account at Banco Popular. Besosa also dismissed the case.