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.