Monday Update – March 18, 2019

Welcome to your weekly Title III update for March 18, 2019. Different from previous weeks, this time a lot happened in PROMESA.

On March 12, 2019, just before the Omnibus hearing, AAFAF objected to the fee examiner’s report for a 5-7% increase in the fees by attorneys in the case. It wanted it capped at 2%. Judge Swain, however, approved the fee examiner’s report. If the Commonwealth wants to control the cost of litigation, all it has to do is reduce its litigation and request that the Board do the same. Just saying.

Also on March 12, 2019, the UCC filed an Omnibus Objection to the ERS bonds saying they were issued ultravires and also filed a separate objection to Oaktree Funds’ ERS bonds. The UCC states:

In 2008, ERS issued approximately $3 billion of ERS Bonds in underwritten public offerings.3 The ERS Bonds were issued as part of the failed implementation of an ill conceived “arbitrage” strategy ostensibly designed to rescue ERS from eventual insolvency. In 2011, the Puerto Rico Legislative Assembly stated that the issuance of the ERS Bonds “was illegally made by [ERS] even though such transaction was submitted to the Legislative Assembly for approval and rejected by the House of Representatives for deeming it detrimental to the System.” Act 116-2011 at Statement of Motives (emphasis added).

As previously raised by the Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”) and other government parties in ERS-related adversary proceedings, the issuance of the ERS Bonds was “illegally made” in that the ERS Bonds were issued ultra vires. ERS’s statutory “authorization to incur debt” is limited to “seek[ing] a loan from any financial institution of the Government of the Commonwealth of Puerto Rico or the Federal Government of the United States of America or through the direct placement of debts.” (emphasis added). A government entity such as ERS has no inherent power to issue bonds to the public, and any such power must be expressly granted by statute. Furthermore, as commonly understood in the finance world, a “direct placement of debts” means a private placement, not a public offering. Indeed, whenever the Puerto Rico Legislative Assembly has granted bonding authority to a Commonwealth instrumentality (both before and after it authorized ERS in 2008 to “seek loans”), it has done so expressly and specified that the bonds may be sold publicly or privately.

Because the ERS Bonds were issued ultra vires, they are null and void, and the bondholders have no remedy against ERS. Accordingly, all claims asserted against ERS based on the ERS Bonds must be disallowed in their entirety.

I wonder if this move is related to the possibility that the Board at some time soon may be unable to act in the Title III cases. In any event, this is going to very interesting. In a related matter, Judge Swain issued an order to deal with the ERS bondholders’ request for lifting the automatic stay:

This matter is before the Court on opposing motions proposing litigation schedules related to the Motion of Certain Secured Creditors of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico for Relief from the Automatic Stay (Docket Entry No. 289,2 the “ERS Lift Stay Motion”). Movants3 and the Employees Retirement System of the Government of the Commonwealth of Puerto Rico (“ERS”) have provided the Court with dueling schedules, where they have agreed on the events which need to occur before a final hearing on the ERS Lift Stay Motion but disagree as to the applicable timeline. (See Docket Entry Nos. 388 and 389).

The Court has considered carefully the provisions of 11 U.S.C. § 362(e)(1) regarding the prompt disposition of motions for relief from the automatic stay. In light of the complexity of the issues, and the need for adequate time for discovery and related litigation, the Court finds that compelling circumstances require that the Court extend the final hearing date to May 21, 2019. (See 11 U.S.C. § 362(e)(1) (providing that the timing of a final hearing may be extended “with the consent of the parties in interest or for a specific time which the court finds is required by compelling circumstances.”).)

Accordingly, the Court sets the following schedule for the ERS Lift Stay Motion:

  1. March 15, 2019: Deadline for completion of exchange of documents and

exchange of privilege logs with respect to non-ESI production.

  1. March 18, 2019: Meet and confer on outstanding discovery issues.
  2. March 21, 2019 at 3:00 p.m. (Atlantic Standard Time): Deadline for first

round of motions to compel.

  1. March 25, 2019 at 3:00 p.m. (Atlantic Standard Time): Deadline for

oppositions.

  1. March 27, 2019 at 3:00 p.m. (Atlantic Standard Time): Deadline for replies.

As you may see, Judge Swain has given the Board a date after the May 16, 2019 First Circuit deadline, which I am sure will be part of the request to the Supreme Court for a stay on said order. It helps to have an understanding and pro-Board judge.

On March 13, 2019, the Judge held an Omnibus hearing. The first matter in the agenda was a report by the Board on the status of the cases. Martin Bienestock, the Board’s principal attorney, announced that his client would seek a modification of the First Circuit’s stay and would also request certiorari from the ERS ruling. So much for saving on litigation. Mr. Bienestock also reported the Board was working on the Fiscal Plans, the Budget and the suggestions appeal by the Commonwealth. He also said they were monitoring fiscal reforms (Law 80, maybe), negotiating with creditors and suggested there would be further Title III’s. Judge Swain then asked for the timing of the new plans. Mr. Bienestock then said that the Commonwealth Plan would be filed possibly at the end of April, 2019, depending on creditor support. Suspect timing to say the least.

After this came out, Mark Stancil, for the GO creditors group took the podium. He started by saying the obvious, there is a lot of litigation and the Board had not engaged with creditors (I suppose he meant the GO groups since there are reports Judge Housser had to suspend mediation since the parties would not budge). He stated that the GO’s would file additional litigation having to do with the failure of the Board to impose change on the Puerto Rican Government. Stancil questioned how a Plan of Adjustment could be contemplated without these changes and that these reforms were crucial. He encouraged the Board to nudge and had to put the politicians through their paces.

Mr. Bienestock then said that the GO’s were a gating issue for the Plan of Adjustment. He also mentioned the Board tried to repeal Law 80 but they failed and if Mr. Stancil wanted to tell them how to do it, he was willing to listen. He added that the Board was willing to negotiate with creditors.

There are considerable views out there that believe the Board has simply failed to force change aside from its letter writing campaign to the Governor and the photo-ops at Fortaleza. It is clear to most that this Board has simply resorted to becoming a tool for debt relief and establishing legal precedents for future state bankruptcies rather than a force for fiscal and governmental reform. Once again, the people of Puerto Rico lose.

Later, the Board tried to explain that the problems reported in the COFINA bond exchange was due to market fluctuations and that everything would be fine from now on. Maybe.

Next was Luc Despin of the UCC. He started saying that he agreed with the Board in 98-99% of the cases but since January of 2018 it has been saying Alternate Dispute Resolution (ADR) was needed but nothing had come out it. He complained that the UCC had been excluded from the PREPA RSA and the Committee had a right to be involved. When asked if he had confronted the Board, Despin said yes.

Bienestock answered that there had been more negotiations with the UCC than with anyone else but that he did not see what the Committee had to do with secured creditors. Although Despin believes the Committee had a place at the table, Bienestock does not agree as to secured creditors. Judge Swain asked the parties to meet and confer and if anything has to be resolved, she would deal with it. Mr. Rosen, another attorney for the Board, informed the Court that the Board was working on ADR and would have something ready for the next Omnibus hearing of April 24, which was news for the UCC.

The issue of ADR is important. There are thousands upon thousands of lawsuits stayed because of the Commonwealth’s Title III filing and have to be deal with in the Plan of Adjustment. Almost all are without a judgment. In order for ADR to work, not only must there be a structure but also mediators and time to evaluate each case. This cannot be done by April 2019. But the Board said it would file a Plan of Adjustment by that date. Moreover, the Board just made an RFP for a claims management and reconciliation agent drive.google.com/file/d/12QgoIW… If it is going to start this procedure at the end of March, how can it have a Plan of Adjustment by April? If the Federal Government is taking over statistics for Puerto Rico because the island’s are unreliable, how can a Plan of Adjustment be seriously considered at the end of April. If the Board insists that the objection to some GO’s issued is a gating issue for the Plan of Adjustment be filed at the end of April? Questions, questions.

Cooperativa de Ahorro y Creditor Vegabajeña filed an adversary proceeding against the Board and ERS claiming it has a lien over individual retirement contributions held by the ERS but belonging to Commonwealth employees and ERS participants. Soon the UCC will seek to intervene, as is its right and this case will go to judgment and whoever loses will appeal to the First Circuit and possibly seek certiorari from the SCOTUS. Thus is the Board’s way.

Finally, and very importantly and very telling, during the night of Friday March 15, 2019, the Board put in its website the Duff & Phelps IFAT Report on the Title III Bank Accounts as of June 30, 2018. Yep, it is not a typo, this report is as of June of 2018. This report is the Board’s response to AAFAF’s revelation in December of 2017 of over 800 accounts with almost $6 billions.

The Report is over 150 pages with its different tables and exhibits. At page 4, it states:

A principal goal of the Project was the publication of a report that would include a description of the processes employed, the results obtained and an opinion from D&P on whether or not procedures performed validate, with a high degree of certainty, that Commonwealth bank and investment accounts were identified and account balances as of the Measurement Date were accurately disclosed (the “Report”).

The report states that it depended on the voluntary cooperation of the Puerto Rican Government and its dependencies, but not all cooperated. At page 4, footnote 6, the Report makes clear this is not an audit. Curious. Also interesting, at page 4:

Based on a classification (a “Classification”) asserted by Commonwealth entity account holders regarding whether bank account funds were subject to certain types of restrictions, certain legal due diligence and financial analytical procedures were performed to identify the support for, nature of, and terms of such Classifications. As part of the Commonwealth bank account holders’ (“AH”) response, the entity was asked to provide supporting documentation for the Classification. The results of the legal due diligence and financial analytical procedures performed are set forth in Section III.

Guess who did the legal due diligence? O’Neill & Borges, the Board’s local counsel. Talk about a conflict free and impartial evaluator!

Continuing at page 7, the Report states that “[a]nalytical procedures peformed on the Restricted-Selected accounts is ongoing. The work regarding analytical procedures is not sufficiently developed to indicate whether or not AH cash flows do or do not support the Restrictions.” WHAT!!!??? This Report does not even state that the funds that the Commonwealth claims are restricted for another use are in fact restricted? Amazing!

Moreover, the Report at page 10 states that “D&P regards the CE not identified by Counsel or not covered by the Report, as described in paragraph 10 of Section I,  as described in paragraph 10 of Section I, such as the Puerto Rico Aqueduct and Sewer Authority (PRASA) and municipalities are outside the scope of this Report.” Paragraph 10, which is at page 5, makes clear that D&P must:

[F]ocus on those Commonwealth instrumentalities identified by counsel as Title III entities or covered by the Commonwealth Fiscal Plan certified by the FOMB as of October 23, 2018, and set March 12, 2019 as the Report issuance date. The University of Puerto Rico (“UPR”) is also included in the Report because the UPR relies heavily on funds provided from the Commonwealth to sustain its operations.

In other words, PRASA, the Municipalities could have billions in accounts but we will never know from this report. Unbelievable. Total waste of taxpayer dollars.

At page 14, the Report states that in unreconciled accounts, there are $11,575,189,236 in different accounts, of which $4,806,456,332 are unrestricted, $1,245,598, 957 as to which no representation has been made, $5,356,298,000 as restricted and $166,935,947 in a Commonwealth pooled account. In other words, the Commonwealth is sitting on at least $6 billion in cash with could be used for debt payment. That is without the benefit of a review of why over $5 billion is considered restricted. That is almost two years of full debt service of Puerto Rico’s debt.  If we look at the reconciled accounts at page 15, we have over $10.2 billion, of which over $5.7 billion are unrestricted or no representation has been made. Mindbogling.

Moreover, at page 23, the Report states that it could not “validate the claims of AH who reported that GDB was holding funds for them as of the Measurement Date. The sum of bank account balances (Table 10) which were reported as held at GDB cannot be validated, and therefore have been excluded from the values reflected in the Table 1 and Table 2.

At page 24, the Report states that neither the Judiciary nor PREPA had responded to D&B requests for information. Pages 25-26 makes recommendation as to work needed to be performed.

At the time of the revelation of these secret bank accounts, the Board sought to blame the Governor for withholding this data from the Board, and commenced the Duff & Phelps inquiry. Nothing could be farther from the truth. At the time, I released a secret [communications log] between AAFAF and the Board, which demonstrates there was no deception on the part of the Puerto Rican Government. Rather, why then did the Board go to great lengths to hide these accounts, and then when caught red-handed, attempt to paper over them with outside counsel report?  Why after spending hundreds of thousands of dollars to hire Duff & Phelps we still don’t have all of the answers? The involvement of O’Neill and Borgess raises even more questions, especially considering that one of the architects of PROMESA, former Resident Commissioner Pedro Pierluisi, remains a lawyer and lobbyist for the Board. Moreover, this report raises more questions than provides answers. Why are certain accounts restricted? What will be done for the unrestricted accounts? How could these accounts not be known by the García Padilla Administration and hence the Obama administration when they went to Congress claiming a humanitarian crisis? How can you justify not paying bondholders and unsecured creditors when the Commonwealth is sitting on this pile of cash? Why was this report not an audit, where an opinion would be issued? These questions only reinforce what I have been thinking for a while; the objections to any Commonwealth Plan of Adjustment will be monumental, both by bondholders and unsecured creditors. Litigation will go on for years and there will be no end to it, unless the Board sits down and settles with creditors, both secure and unsecured. The likelihood of this happening, however, is slim to none.

This summary is merely what I believe are the more salient motions and decisions in the cases. I receive an average of 20 filings each day so it would be impossible to summarize everything. If you have legal interest in these cases, I urge you to hire an attorney to represent you.

Monday Update – March 11, 2019

Welcome to your weekly Title III update for March 11, 2019. Very little happened last week.

I reported last week that Judge Dein denied the Board’s urgent motion for production of certain documents it requested in the lifting stay to appoint a receiver in PREPA. Undeterred, the Board requested reconsideration via Rule 59 and 60 of the Federal Rules of Civil Procedure from Judge Dein on Friday March 8. In my experience, Courts seldom reconsider but this is part of the Board’s confrontational attitude to all Title III cases. On Friday, Judge Dein ordered that “[a] ny response shall be filed by March 19, 2019 at 3:00 p.m. Atlantic Standard Time. Any reply shall be filed by March 25, 2019 at 3:00 p.m. Atlantic Standard Time.” Let’s see what she decides. Remember the hearing on the merits will be held on May 8, 2019. Will the First Circuit’s opinion on Aurelius influence Judge Swain’s decision on this matter? If there is no appointed Board by that date, will she decide to grant the monolines wish and allow another Court to appoint a receiver for PREPA? Having only the benefit of the monolines’ expert reports, it seems the utility is being badly managed. Questions, questions.

The new kid on the block, the Lawful Constitutional Debt Coalition, filed a motion to intervene in the PBA adversary proceeding. The Board stated that it would not object but what is interesting is that the intervention requested is as a defendant and in their proposed answer to the complaint, the Lawful Constitutional Debt Coalition requests that it be dismissed. Now we don’t know on which side this group will be. Interesting.

The number of notices of participation in the GO litigation continues to grow. This is something we must keep a close eye since all the ones I have examined are pro se. They need legal representation.

The First Circuit denied Utier’s request for rehearing and rehearing en banc. The union quickly vowed to go to the Supreme Court. This belies Mr. Skeel’s claims that it was Aurelius who was behind the challenge. Utier has made it clear that it wants all of the Board’s actions to be declared null and void. Let’s see who arrives at the SCOTUS first. And talking of Mr. Skeel, he posted in Twitter the following comment as to the First Circuit’s denial of rehearing. “Very clear here and in the First Circuit’s Feb 21 decision rejecting a challenge from Puerto Rico lawmakers that the Board’s authority is fully intact until the Apptments [sic] Clause ruling goes into effect (if it ever does.” Very cocky tweet considering how difficult it is to obtain certiorari review from the SCOTUS and even if it is obtained, winning is not a sure thing. Just ask the García Padilla administration that obtained two certioraris for the same year, only to lose both decisions on the merits. Also, let’s not forget that Mr. Skeel filed an amicus brief in support of the Puerto Rico Recovery Act. He did not persuade the SCOTUS. Moreover, this does not show much respect for the First Circuit decision, which bottom line only affects the present members’ appointments, with purportedly two not wanting to seek review.

Caribbean Business reports that Mr. Skeel said there is no timetable for the publication of the Duff and Phelps report on the government’s bank accounts. This is important for according to emails in my possession, the Board knows of the existence of these accounts no since December 2017 when it was announced but July of 2017. This knowledge and the subsequent feet dragging on any report makes you wonder at the Board’s insistence on the Commonwealth’s lack of transparency. According to the weekly, “the island’s bank accounts have more than $12 billion, of which $3.6 billion is in a restricted account subject to the bankruptcy proceedings and $4.1 billion is in the Treasury Single Account.” Very hard to justify not paying bondholders and other creditors with that much loot.

The Omnibus hearing was transferred to NYC and will be held on March 13. Very little to happen, I think.

This summary is merely what I believe are the more salient motions and decisions in the cases. I receive an average of 20 filings each day so it would be impossible to summarize everything. If you have legal interest in these cases, I urge you to hire an attorney to represent you.

Monday Update – March 4, 2019

Welcome to your weekly Title III update for March 4, 2019. The Aurelius case continues to dominate Aurelius the PROMESA news.

As I predicted, the Board announced on February 28, 2019, that it will seek certiorari from the Supreme Court on the Aurelius decision and a stay on the First Circuit judgment. In addition, Mr. David Skeel told the Puerto Rico Chamber of Commerce that the decision from the Supreme Court could come in the fall. Caribbean Business reported, however, that this decision was not unanimous. Would love to see the transcript of that meeting. Was it a 4-3 decision? Was it only the Claims Committee members? My sources tell me it was but I doubt if we will ever find out.

Add to this, the Board objection to the GO challenge and you can see the Board’s strategy. If the Board files late April the petition for certiorari, there will be no time for the case to be seen this term and the petition would be set, if granted, for the start of the Supreme Court term, first Monday in October 2019. If the oral arguments are in October, the decision would not come down until late November or early December. Moreover, the Supreme Court frequently grants stays in cases that later it does not grant a certiorari. Also, the Board may seek an extension of time to file the petition for certiorari and seek the stay on the First Circuit decision. This would take the time for the decision to come denying the certiorari into late 2019 and if granted, any decision into 2020. All the while, the Board could continue to operate even if later ruled unconstitutional by the Supreme Court.

Finally, today Utier filed a motion for rehearing en banc for the entire First Circuit to review the Aurelius decision. The Utier motion states at pages 15-17:

The court must reconsider its decision. First, the Court must determine that the actions taken by the Oversight Board members after the filing of the complaint on August 6, 2017, are null since its good faith ended when the legality and constitutionality of their appointments were questioned. Therefore, the actions taken by the Board, after the filing of the complaint, were taken in bad faith and with full knowledge of the vice in their appointments. Also, the Court must reconsider its decision to allow the Board to continue operating for 90 days since at this time its appointments are unconstitutional. We, respectfully submit, that the Court must not allow an Oversight Board with unprecedented and unlimited powers, that was unconstitutionally appointed, to make vital decisions about a country that is going through one of its worst economic, political and social crises as if it they had a constitutional appointment.

If the Court allows the Oversight Board to continue operating, its members would be acting without legal authority or credibility, in bad faith, subject to attacks questioning its motivations and they would be making important decisions and determinations for Puerto Rico without the power to do so.

Utier asked for the following remedy:

For the above stated reasons, UTIER prays for a Panel Rehearing or a Hearing En Banc to modify the Judgment in this case to declare void and null all the Oversight Board’s actions and decisions since the filing of the Complaint on August 6, 2017. Furthermore, this Court should stay all the Oversight Board future determinations or proceedings after the Judgment of this case was issued on February 15, 2019, until its members are reappointed, or the Oversight Board is reconstituted with the advice and consent of the Senate.

Rule 13.3 of the Supreme Court of the United States, reads as follows:

The time to file a petition for a writ of certiorari runs from the date of entry of the judgment or order sought to be reviewed, and not from the issuance date of the mandate (or its equivalent under local practice). But if a petition for rehearing is timely filed in the lower court by any party, or if the lower court appropriately entertains an untimely petition for rehearing or sua sponte considers rehearing, the time to file the petition for a writ of certiorari for all parties (whether or not they requested rehearing or joined in the petition for rehearing) runs from the date of the denial of rehearing or, if rehearing is granted, the subsequent entry of judgment.

This means that now the Board has more time to file its petition for certiorari and extend their appointment. This would allow the Board to finish the GO challenge or settle it and then move for the Plan of Adjustment. Once the Plan of Adjustment is filed, it will have a momentum of its own and maybe influence the Supreme Court to overturn the First Circuit for practical reasons. Not likely, but possible. Since last Friday, Mr. Skeel has been in the press pushing an agenda that has only one thing in mind: the filing of the Commonwealth Plan of Adjustment, which obviously is the only thing the Board cares about.

To top it all off, Bond Buyer quotes Congressman Bishop saying that the First Circuit opinion should be appealed because the Court got the powers of the Board all wrong. Even if he is right, which he is not, that has nothing to do with the appointments clause. Let’s see what happens.

Moreover, although the Board members’ term ends in August, PROMESA section 101(e)(5)(C) establishes that “[u]pon expiration of a term of office, a member of the Oversight Board may continue to serve until a successor has been appointed.” Hence, if President Trump decides not to bother with new appointments, the present Board members can continue in place. But section 101(5)(D) states that “[a]n individual may serve consecutive terms as appointed member, provided such reappointment occurs in compliance with paragraph 6.” Section 101(e)(6) states “[a] vacancy on the Oversight Board shall be filed in the same manner in which the original member was appointed.” The present members were appointed in a manner not available anymore unless the First Circuit opinion is overturned. Would this be the real reason they will seek certiorari?

The wild card in all of this is President Trump. He could decide to join the Board in its request for certiorari and stay of proceedings. He could, however, decide to appoint a new Board and possibly moot the Board’s petition for certiorari. Moreover, Aurelius and Utier could push for the Supreme Court to determine that all of the Board’s actions are invalid, overturning part of the First Circuit’s holding. This could push the Supreme Court to quickly deny certiorari or deny any stay petition, under the idea that it is better to have a new Board than risk having the whole Title III and other decisions be rendered invalid.

Seems to me that the best thing for Puerto Rico and its Title III cases to have the present Board cease litigating these issues and remove any possibility of its decisions be rendered invalid. That, however, would mean relinquishing power. Reminds me of what James F. Byrnes once said: “Power intoxicates men. When a man is intoxicated by alcohol, he can recover, but when intoxicated by power, he seldom recovers.”

The Board, in reaction to the ERS bondholders’ motion for appointment of a trustee, filed a stipulation between this agency and the Commonwealth the following effect:

The period in which Avoidance Actions of the Commonwealth, on the one hand, and ERS, on the other hand, must be commenced against one another pursuant to sections 546(a) and 549(d) of the Bankruptcy Code (the “Statutory Deadlines”) shall be tolled such that the Statutory Deadlines shall expire (a) two hundred seventy (270) days from and after the date on which the Statutory Deadlines would have expired in the absence of this Stipulation unless (b) the Commonwealth or ERS provide written notice of early termination (the “Termination Notice”) in accordance with clauses (A) and (B) below, in which case, the Statutory Deadlines shall expire on the date that is one hundred fifty (150) days from the delivery of such Termination Notice plus the number of days between the Stipulation Effective Date, as defined below, and the date on which the Statutory Deadlines would have expired in the absence of this Stipulation to: (A) the Court, through the filing of an informative motion, and counsel to the Bondholders, by serving a copy of such Termination Notice upon (B) (i) Jones Day, 250 Vesey Street, New York, NY 10281, Attn: Bruce S. Bennett, Esq., by hardcopy and email transmission ([email protected]), and (ii) White & Case LP, 200 South Biscayne Boulevard, Suite 4900, Miami, FL 33131, Attn: John K. Cunningham, Esq., by hardcopy and email transmission ([email protected]); provided, however, that, the foregoing is without prejudice to (y) the rights, interests and defenses that may be raised by either the Commonwealth or ERS in connection with any such Avoidance Actions, other than the applicable statute of limitations, laches, or any other time-related defense and, (z) the treatment of the Statutory Deadlines as may be provided in a plan of adjustment for the Commonwealth or ERS, subject to the effectiveness and consummation of any such plan of adjustment.

  1. The Commonwealth and ERS shall have the right to extend the period set forth in Paragraph 1(a) above for a period specified in writing upon thirty (30) days’ prior written notice and service of such notice upon the Court and counsel for the Bondholders in the matter set forth above.

Judge Swain promptly approved the stipulation. The whole process in the ERS will be interesting to watch.

A new Group of GO called the Lawful Constitutional Debt Coalition that holds or manages PBA and GO bonds filed appearance in the Commonwealth Title III. The group hired Susheel Kirpalani from Quinn Emanuel who successfully represented the COFINA Senior Bondholders during Title III. It is not clear what position they will take on the bonds. Will they oppose the Board and the UCC defending those challenged bonds? Will they instead be the class that is needed to accept the Plan of Adjustment for the cramdown pursuant to PROMESA sec. 314(c)? We need to watch this group, and its members. We will soon find out more.

Finally, we cannot let today’s update go by without acknowledging the intense lobbying being undertaken by the Board and her advocates to project confidence, control and to influence the legal process.  Simon Johnson, the famed British-American economist and proponent of PROMESA claims a “tragedy looms” in Puerto Rico following the First Circuit’s decision.  His doom and gloom view was prominent in 2016.  He writes that adhering to the Constitution’s Appointments Clause is a “purely procedural issue” and suggesting the U.S. Constitution is not as important when the lights could get shut off.  These claims are as tired as the Board and Governor Rosselló’s bickering.  As a refresher from our British friend turned U.S. citizen, the U.S. Constitution was written after the defeat of British Tyranny. It appears though Mr. Johnson would like the Oversight Board to be more like the British Monarchy. In fairness, Johnson does get one thing right when he writes, “Trump could immediately nominate, and the Senate could confirm, the current oversight board members, or, as Skeel points out, a new set of board members could be chosen.”  I guess we all wait on Mr. Trump.

Judge Dein denied the Board’s urgent motion for production of certain documents it requested. The Board, however, was not deterred. On March 2, 2019, the Board filed a motion for reconsideration stating that new documents were being reviewed and would renew its motion by March 4. The litigation so loved by the Board continues.

Each day more and more notices of participation in the GO litigation are being filed but for the most part as pro se. I urge these persons to hire an attorney. The issues are of Puerto Rican law and are not simple.

This summary is merely what I believe are the more salient motions and decisions in the cases. I receive an average of 20 filings each day so it would be impossible to summarize everything. If you have legal interest in these cases, I urge you to hire an attorney to represent you.