UPDATE: PR SEEKS PROMESA STAY UNDER SECTION 405 ON CASES CHALLENGING MORATORIUM LAW

 

 

An update on the earlier blog post on the cases of Brigade Leveraged Capital Structures Fund, Ltd. v. García Padilla, 16-1610; National Public Finance Guarantee Corporation v. García Padilla, 16-2101 and Trigo v. García Padilla,16-2257, which seek a declaration that the PR Moratorium law is unconstitutional.

 

The Puerto Rico Government has asked Judge Besosa to stay proceedings due to section 405 of PROMESA which stays on all cases seeking monetary compensation from the ELA.

 

Judge Besosa, who previously decided the PR Recovery Act was preempted by section 903 of the Bankruptcy Code, ordered plaintiffs to brief the issue no later than July 18 and said he was unable to decide without this briefing. He further decided he was NOT going to grant a stay at this time and denied motions to the effect of staying case until the issue was decided.

 

In my experience, Judges issue temporary stays when they are convinced it is proper. The denials here show that Judge Besosa is leaning on not granting the stay request since none of these three cases request monetary compensation which is what section 405 of PROMESA precludes. I believe Judge Besosa will decide this and other issues in the cases by August 2016.

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