Puerto Rican bankrupt parties oppose Supervisory Board deal
Several Puerto Rican bankrupt parties objected to the bankruptcy agreement documents proposed by the Supervisory Board, saying they were discriminatory, did not respond to the judge’s instructions and attempted to violate applicable bankruptcy law .
Among the opponents who filed objections to the revised documents filed by the council with the bankruptcy court were the Puerto Rico Fiscal Agency and Financial Advisory Authority, prominent domain objectors Suiza Dairy and Finca Matilda, the holder of bonds Peter Hein and several teachers’ unions.
Earlier in December, Judge Laura Taylor Swain filed an order directing council to revise proposed documents or, in some cases, justify passages of documents. The board provided it on December 20 and 21. By early Monday afternoon, Swain had not responded to the objections.
In its court case, the FAFAA said the Supervisory Board “continues to insist on the use of Title III” of the Puerto Rican Surveillance, Management and Economic Stability Act to deal with the measures of the budget plan “which are properly addressed in Titles I and II of PROMESA.”
“The council’s latest (and arguably most brutal) attempt to confuse the Title III debt restructuring process with the Title II budget process is reflected in the council’s new condition that the plan cannot go into effect. that if laws 80, 81 and 82 and common resolution 33 (collectively, the “laws of August 2020”) are pre-empted or canceled, ”argued the lawyers for the FAFAA.
The board lodged a lawsuit against the FAFAA, the governor and other agencies last week to stop the implementation and enforcement of pension laws which it says will add $ 8.3 billion retirement benefits for government employees. Board spokesman Matthias Rieker said last week that if certain pension laws were kept, the adjustment plan would not be achievable.
The FAFAA told Swain: “This court should not allow such a condition to be inserted into the plan at this late stage, especially when it is nothing more than a thinly veiled attempt by the council of administration to bypass the Title II process and predetermine its outcome. “
Lawyers for the FAFAA also argued that the court should not allow the board of directors to use Title III to “remove the protections and powers reserved for government under Titles I and II of PROMESA, especially when ‘There are specific safeguards under such titles that preserve PROMESA’s unique balance of power between board and government.
The FAFAA asked Swain to order the board to remove the pre-emption laws from the agreement documents.
Among the arguments of bondholder Peter Hein was that the promulgation by the local government of the pension laws mentioned above shows that the adjustment plan proposed by the council is neither feasible nor in the best possible way. interest of creditors.
Hein also said that the board’s postponement of the agreement’s effective date to March 15 was a clear signal that the court should seek a ruling from the U.S. Internal Revenue Service regarding the status. tax exemption of the resulting obligations before the court confirms the agreement.
Finca Matilda, Inc. has a claim against the government of Puerto Rico on the basis of prominent domain claims. In her mid-December order, Swain said she was opposed to the board’s proposed deep cuts for those demands.
After that, “the court ordered the [board] either to submit a proposal for modifications “in accordance with its memorandum order” or a “presentation of the reasons why the request for confirmation should be rejected in the absence of such modifications”. … The Supervisory Board did both but did not respect either, ”said Finca Matilda.
Finca Matilda contends that the newly proposed plan documents “constitute a blatant attempt to stop the leak” of the findings of the court’s memorandum order on eminent domain claims in reverse conviction claims, as well as jurisdictional constraints of the Rooker Feldman doctrine, and to unlawfully shift the burden of proof to the creditors in the debt opposition process established in bankruptcy laws and under PROMESA.
“The Rooker-Feldman doctrine deprives federal and bankruptcy courts of jurisdiction over lawsuits that are essentially appeals from state court judgments,” said Finca Matilda.
The board’s response to the judge’s concerns about the agreement’s treatment of eminent domain claims “is simply a request for reconsideration that does not comply with the applicable standard of Rule 9023. There is no no newly discovered evidence, there is no manifest error of law or fact, no manifest injustice and no change in the controlling law, ”said Finca Matilda.
Another prominent part of the estate, Suiza Dairy, said in her case, “it should be clear that a regulatory take has taken place and an agreement for the reimbursement of the take has been made.”
“In addition, the newly proposed plan now discriminates against Suiza, as the plan offers to pay 100% on all other compensation claims, but only pays Suiza Dairy 50%,” he said. said Suiza. Suiza asked Swain to withhold approval of the proposed board deal unless it includes an amendment allowing 100% payout for Suiza.