Today, Judge Swain held the December Omnibus hearing. The first order of business was Martin Bienestock giving a status report on the cases. As we know, the GDB Title VI was finished and the COFINA Plan of Adjustment confirmation hearing will be heard on January 16-17, 2019. He also announced that the PREPA RSA is under way but no mention was made of the bondholders’ request for a receiver for the utility.
Mr. Bienestock also announced that the Commonwealth Plan of Adjustment was the subject of mediation. This is the first time this is mentioned. He stated that there are issues with the PBA bonds (whether they are leases) and that there will be claim challenges based on the Kobre & Kim report. Also, for the first time, we were told that the Commonwealth Plan of Adjustment could proceed with a cramdown, depending on the objections that are raised, presumably during mediation. If the objections are legal, we were told they would be keyed up to the Court. If they are monetary, then there could be a cramdown. There was no mention of GO’s or any other bondholder group.
What does this mean? In the last Omnibus hearing,there was no mention of the Plan of Adjustment of the Commonwealth and there was a mention that the Highways Plan of Adjustment was intimately related to the Commonwealth’s. I think the Board feels that its time is running out. The Board members term of service expires in August 2019 and it is imperative they get this Plan of Adjustment under way before Trump appoints seven new members.Also, the Governor needs to get this underway before election year 2020,especially if the cramdown is very favorable (as it probably would be) to the Commonwealth. Finally, if the Aurelius decision is reversed by the First Circuit, it is likely that a certiorari will be granted by the U.S. Supreme Court and a decision would come down near the end of their term, on June 30,2019. Timing is everything. Mr. Bienestock said we would know more by March-April but Judge Swain said she would probably want further update on January 30. Let’s see what happens.
Mr. Bienestock also mentioned that the Board was working on the PRASA and UPR cases, but did not provide any details. Very difficult to have the union contracts or pensions modified without a Title III though. More waiting. The Teachers Union had requested lifting of the stay. The hearing was today but the parties postponed it to January 30 since they are still discussing the issues.
The Board told Judge Swain that it would address many of the concerns of the persons that had sent letters and emails to the Court about the COFINA deal and the Plan of Adjustment. Judge Swain mentioned that she would like to give persons selected at random 5 minutes to vent their concerns either to the settlement or the Plan of Adjustment. She said it would take between 1-2 hours.
Also, the Board announced that it would file three more Omnibus objections to the COFINA proofs of claim and would also file some individual objections. Finally, a supplemental plan will be filed by COFINA at the end of the month.
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.