Puerto Rico

JULY AND THE COMMONWEALTH PLAN OF ADJUSTMENT

 

 

During the June 12, 2019 Omnibus Hearing, Martin Bienestock informed Judge Swain that the Board would file the Commonwealth Plan of Adjustment. Since the Plan of Adjustment must be consistent with the Fiscal Plan, and the latter requires cuts to pensions, it is likely Governor Rosselló will oppose it. To this we must add that the Board filed an adversary proceeding against the Commonwealth to invalidate law 29-2019, which exempts municipalities from contributing to the pension funds and medical plans. The adversary proceeding also wants the Commonwealth to comply with the reporting requirements throughout PROMESA. The Governor has promised a vigorous defense.

 

Although PROMESA is silent on this issue, an opposition by the Commonwealth to its Plan of Adjustment does not abide well for it. In addition, GO bondholders will oppose since it severely cuts its “secured” credits. Moreover, although the Board sued to invalidate certain PBA and GO bonds, it now wants a stay on that litigation in order to process the Plan of Adjustment. Although this stay only benefits the Board, it is likely Judge Swain will grant it. Moreover,  from the glimpse we got from the Board when it announced its settlement with certain GO and PBA creditors, it seems unsecured creditors of the Commonwealth will receive ~ 9% of their claims. Since the Commonwealth is sitting in over $10 billions in deposits which no one has explained, it is a certainty that there will be myriad of complicated and arcane objections to the Plan of Adjustment even before it is voted upon.

 

We must also consider that the Rosselló Administration is facing close to a dozen investigations by the FBI and the Inspector General. If any of these investigations results in arrests of the administrations close collaborators or key politicians, will this affect the weight of its objections to the Plan of Adjustment? In any event, it seems plausible that the Rosselló administration wishes to postpone any approval of any Plan of Adjustment until after the elections of 2020 so not to receive any negative impact of said plan, including to start paying debt.

 

Moreover, on July 24, 2019, the First Circuit will hear oral arguments on the issue of Board recommendations being put in the Plan of Adjustment as an order and its implications for the budgets. Judge Swain sided with the Board and although I believe she will be upheld, you never know. If she is reversed, this would create havoc for the Plan of Adjustment. Also, on October 15, 2019, the Supreme Court of the United States will hear arguments on the constitutionality of the Board’s appointments. Normally the granting of the Board’s certiorari would weigh heavily on a reversal but the SCOTUS granted cert on ALL petitions. This means that the SCOTUS could determine that the Board was constitutionally appointed, could affirm the First Circuit decision or could decide the Board was unconstitutionally appointed and all of its actions were null and void. That would mean back to square one.

 

What does this all mean? That even if the Plan of Adjustment for the Commonwealth is filed this month, its approval would likely not be soon. There are too many imponderables at the present time.

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¿Ha usted recibido una demanda MILLONARIA de parte de la junta?

Entre el 30 de abril y el 2 de mayo, la Junta de Supervisión Fiscal y el Unsecured Creditors Committee radicaron casi 230 demandas contra personas individuales y compañías suplidores de bienes y servicios al gobierno de PR. La inmensa mayoría son locales.  Las fechas de las demandas varían, pero van desde el 2013 hasta 2017. Las razones para la demanda son una mezcla de ley de quiebras y ley de Puerto Rico. Todas estas personas y entidades necesitan abogado cuanto antes.

 

Desde la Escuela de Derecho me interesó la ley de quiebras, tomando el curso y el seminario. Cuando trabajé en el Departamento de Justicia en los 80’s, estuve a cargo de todas las quiebras donde el Gobierno de Puerto Rico estaba envuelto. Luego durante mi carrera, tomaba ocasionalmente casos que envolvían asuntos del Tribunal de Quiebras. En el 2006 comencé a estar más envuelto en los casos y en varias ocasiones un Síndico de Quiebras me contrató para recobrar dinero para el caudal del quebrado. Además, desde el 2009 represento al Municipio de San Sebastián en los casos de quiebra.

 

Fui el primer analista en Puerto Rico en indicar que venía una Junta de Supervisión Fiscal para Puerto Rico en el 2013. Muchos se burlaron de mi pero la Junta vino de todas maneras. Desde el principio de la Ley PROMESA he estado envuelto en ella, más aún cuando los casos de Título III (la Quiebra) fueron radicados. He representado varias partes en el caso de la Quiebra de Puerto Rico y en este momento representó a varias compañías, un municipio y un grupo de demandantes en un pleito laboral con la Autoridad de Carreteras. Estoy empapado en todas las incidencias del caso ya que los martes a las 5:30 reportó lo ocurrido en el programa de Kike Cruz en Notiuno. No represento ni he representado bonistas en el caso.

 

Por la presente hago claro que estoy disponible para defender a las personas o entidades demandas en el caso. Aunque la defensa no va a ser barata, la alternativa es una sentencia en su contra de varios millones. Me pueden contactar por mi correo electrónico johnmuddlaw@gmail.com o al teléfono 787-413-1673.

 

 

Have you received a complaint from the board claiming MILLIONS?

Between April 30 and May 2, the Fiscal Oversight Board and the Unsecured Creditors Committee filed almost 230 lawsuits against individuals and companies supplying goods and services to the PR government. The vast majority are local.  The dates of the claims vary, but they range is from 2013 to 2017. The reasons for the lawsuits are a mixture of bankruptcy law and Puerto Rico law. All these people and entities need a attorney as soon as possible.

 

Ever since my years in Law school, I was interested in bankruptcy law, taking the course and the seminar. When I worked in the Department of Justice in the 80’s, I was in charge of all the bankruptcies where the Government of Puerto Rico was involved. Then, during my career, I have been involved in cases involving matters of the Bankruptcy Court. In 2006 I began to be more involved in the cases and on several occasions a Bankruptcy Trustee hired me to recover money for the bankrupt’s income. In addition, since 2009, I have represented the Municipality of San Sebastian in bankruptcy cases.

 

In 2013, I was the first analyst in Puerto Rico and United States to predict that a Fiscal Oversight Board for Puerto Rico was coming. Many mocked me but the Board came anyway. Since the beginning of the PROMESA Law I have been actively involved in it, especially when the cases of Title III (Bankruptcy) were filed. I have represented several parties in the case of the Bankruptcy of Puerto Rico and at this time I am representing several companies, a municipality and a group of plaintiffs in a labor lawsuit with the Highway Authority. I am abreast of all the incidents of the case and on Tuesdays, at 5:30 p.m., I report what is happening in the Kike Cruz program in Notiuno 630am. I do not represent or have represented bondholders in the case.

 

I hereby make it clear that I am available to defend the persons or entities claims in the case. Although the defense will not be inexpensive, the grave alternative is a judgment against you of several millions of dollars which they will collect at all costs. You can contact me by email johnmuddlaw@gmail.com or phone 787-413-1673.