Source: https://controlboardwatch.org/2018/
Timestamp: 2019-04-21 04:35:13+00:00

Document:
Yesterday, Judges Torruella, Kayatta and Thompson heard oral arguments on Aurelius’ appeal on the Board’s appointment. In terms of prior issue exposure, Torruella and Thompson heard oral arguments on two other appeals on November 5 and Judge Kayatta actually authored a couple of PROMESA opinions.
Former Solicitor General Ted Olson argued for Aurelius. Judge Torruella inquired about the appointment of the DC Board and Olson said that they were minor officials, unlike the PR Board members. Judge Kayatta asked if it would be a problem if Congress gave the Governor of PR the power to put the island into bankruptcy. Olson explained that it would. Olson explained that the issue was not so much where the power came from, but what type of power was exercised: state or federal.
In regards to PROMESA stating that the Board is a local entity, Olson stressed that it was not important. Torruella then asked about what the Judges should look at to determine if the Board was a state or federal entity. Olson kind of skirted the answer but Aurelius’ brief discusses the factors and he cited all the pertinent Supreme Court tests.
When Utier, who also claims the Board’s appointment was unconstitutional, began its argument, it was obvious it was arguing for the reversal of the insular cases, to the extent that Judge Torruella reminded the lead counsel that the First Circuit did not have the power to do so, and Judge Thompson joined in this point. Clearly, Utier’s arguments had no impact on the Judges.
Former Solicitor General Verrilli argued for the Board. Torruella quickly challenged him on the argument that governors of the territories are appointed without Congressional approval, saying the statute was clear that this was temporary. Verrilli’s theme was that Congress’ actions showed it was not concerned with the Appointments Clause or the separation of powers. Torruella, who has written extensively on the Constitutional history of PR, challenged him again on the appointment of federal officials in PR before 1917. Clearly, Judge Torruella is not buying the argument that Congress was never concerned about the Appointments Clause in the territories.
Judge Kayatta mentioned that the appointment of the Board and their removal was under federal, not PR law. It is important to note that during the Federal Government’s oral argument, Judge Kayatta told Mr. Wall that if a person is elected, he can be removed by the electors. However, if he is appointed by the President, he can only be removed by him. More on this later.
Judge Torruella asked Mr. Verrilli if DC is covered by the same constitutional provisions (it is not) as PR. Verrilli said they are different but Congress’ power is the same. Torruella then discussed the appointment of territorial judges, which prompted Judge Kayatta to mention that territorial judges for the most part interpret territorial law, but here federal law is involved. Judge Thompson chimed in mentioning that this is bankruptcy law, not territorial law.
Torruella then asked an important question, whether the Governors of Guam and Virgin Islands were appointments. Verrilli made a point to say yes to bolster his argument of inapplicability of the Appointments Clause to the territories.
Judge Torruella then asked whether Altair was the test for a federal/territorial Board and Verrilli said no, but Judge Torruella insisted. Verrilli answered that he had to ignore Altair. Kayatta asked Verrilli whether his argument was that Congress’ compliance with the Appointments Clause in certain territorial cases meant it had to be followed in all cases for the territories? Verrilli answered yes. It is important to note that at the end of Mr. Verrilli’s argument, he became more strident in his argument. More on this later.
Mr. Jeffrey Wall, Principal Deputy Solicitor General of the United States (shows you that the Administration put a lot of effort in this case) argued that the separation of powers does not apply to the territories in the same way as other parts of the Constitution (same old argument). Mr. Wall emphasized, as he did during his entire argument, that otherwise, home rule (electing governors and legislators) would be unconstitutional. Argument clearly intended to scare the Judges.
Judge Torruella then threw in the clincher, asking whether elections were different. This has been Aurelius’ argument from the beginning to forestall the home rule issue. Wall skirted the issue but Judge Thompson came back to it asking the same question. Wall then argued that elections did not change governor’s duties. Judge Kayatta interjected a different but related statement, by stating that Congress says elections are pursuant to state law but the finances are dealt with by our guys. He also mentioned the elections exemption. Very telling. Mr. Wall said that nothing in the cases made such a distinction. This begs the question, why not make the distinction here?
Judge Thompson interjected a loaded question, “could Congress appoint the Board?” Judge Kayatta joined the question. Wall meekly said that would bring other complicated questions. Mr. Wall, hit from several sides with negative comments on his arguments, did what we all do, quoted cases, essentially telling the Judges their view were wrong. He then went into an impassioned plea that there be a stay of the Board’s mandate if the case is reversed, that the Board’s work cannot stop and that bondholders were poised to take the money the Federal Government had earmarked for PR and that (not legally possible in my opinion, rhetoric more than anything else) they did not care about funding essential services (he did not mention that neither the Board nor PR Government have defined what those are). The end of his argument sounded desperate. Judge Thompson then asked: in the case that the Appointment’s clause had been violated, what authority would the Board have to act? Very important question. Wall insisted that before that is done, further briefing would be needed.
As previously mentioned, Judge Kayatta also asked whether Congress could appoint the Board, saying that Congress had come very close to actually doing so. Wall discussed other instances where the President would appoint from a list from Congress. Judge Torruella then asked whether the separation of powers applied or not to the cases in territories, Wall had to admit no. He also insisted on Altair not being applicable.
Judge Kayatta again discussed that one thing is the power of Congress and quite another how it can exercise that power in the territories. Kayatta said the question pivots on substance v. procedure.
Then came the PDP, represented by Hernández-Mayoral, who stated the party had no position as to the constitutionality of the Board (his party had passed a resolution on Sunday against the Board, go figure), even when Judge Thompson asked the question. He was there to tell them that SCOTUS and First Circuit had stated that Congress had relinquished its power over the internal affairs of PR and any statement to the contrary would be wrong. No use to the case, though.
The PPD legislature, however, by voice of Mr. Martínez Luciano, joined the voices that said that the Board was unconstitutionally appointed. He did a good job. Judge Thompson asked whether Congress could repeal the PR home rule. Martínez Luciano skirted by saying that if that happened, the officials would be federal officials.
Olson had reserved 5 minutes for rebuttal and was asked by Judge Kayatta whether USVI and Guam would survive a ruling using Aurelius’ standard of whether the Board was federal. Olson said that the answer to that was elections exemption. Kayatta was not comforted by the answer—there had been no mention of elections exemption up to that point. Judge Torruella asked about the Federal Government’s argument of chaos if they decided in Aurelius’ favor. Olson mentioned that a stay could be implemented and the Board could act but knowing that the new Board would review all of its decisions.
From my experience in the First Circuit, the questions posed by the Judges and the answers to the questions, I would say that Aurelius has a good chance of having Judge Swain reversed, although of course I may be mistaken. This would result in grinding halt of the Title III proceedings and the Board’s authority over the PR Government, who actually would be the only winner since no action could be enforced against it. Given that President Trump is not happy with PR and that the Senate controlled by the Republicans would have to confirm the new Board, there is a chance of not having the same members again. What would be the result is anyone’s guess.
Having said that, the Board’s actions yesterday confirm my suspicion. The oral argument went from 3-4 pm PR time, and at 5:19 pm, I received an alert of a letter from the Board to PR saying it had not been complying with the requirement of sending an impact report on the dozens of laws it had passed in the last few months. Shortly thereafter, it sent a tweet saying that it expected the First Circuit to confirm the well-reasoned opinion by Judge Swain. The Board had never sent a tweet on the previous appeals. Seems to me the Board’s lawyers saw the same thing I saw, a likelihood of reversal and are preparing for it.
It’s all quite ironic though, because before yesterday’s oral arguments, the FOMB counsel must have been feeling pretty confident about the enforcement of Judge Swain’s decision. Au contraire, Mr. Bienenstock. He and his team might be in for a rude awakening. I am sure the Board’s lobbyists are working hard in the Senate and federal government at this time. Good luck. Again, I may be wrong, Verrilli and Wall did a good job but it was clear at the end of their arguments that they knew the Judges were not buying their claims.
Irrespective of this, the loser in the case will immediately request certiorari from SCOTUS, who sees less than 1% of the requests. With a judgment by January, it is totally possible to have briefing, oral arguments and a decision no later than June 30. Let’s see what happens.
Welcome to your weekly Title III update for December 3, 2018. Given that the only news for the week before was the approval of the disclosure statement, I decided not to publish it. This week, however, a few things have transpired.
Last Monday, the Board filed the second amended COFINA Plan of Adjustment with a few modifications. The Board also filed a proposed order approving the forms, both in English and Spanish, of the Omnibus objections to proofs of claim. Judge Swain later approved the order.
On Tuesday, the Board filed a motion to reject COFINA’s contract with Lehman Brothers Special Financing Inc. for the servicing of the debt. The rationale is that the bond exchange changes everything. In any event, it will probably be granted by the Judge.
The Court not only approved the COFINA disclosure statement but also fixed the voting record date for the plan, the Confirmation Hearing Notice, the contents of the solicitation package, solicitation of votes, etc. Two dates are very important; by January 2, 2019, objections to the COFINA Plan of Adjustment must be filed and by January 8, 2019, votes on the Plan of Adjustment must have been delivered.
As to the objections to the Fiscal Plan, none have been filed. Unions in the Puerto Rico government and utilities filed objections to the COFINA/Commonwealth settlement, albeit after the cut-off date, but no objections to the Plan of Adjustment. Moreover, since the unions are not creditors or bondholders of COFINA, it is questionable if they have standing pursuant to 11 U.S.C. § 1109(a), much less when considering Article III of the Constitution. Let’s see if they file objections.
The UCC knows that the Board was in the process of hiring a law firm to find causes of action against potential defendants so it decided to put its foot forward into what the Final Report ignored—the transfer of monies from the Commonwealth defendants. The UCC also knows that the Board is unlikely to pursue all of the causes of action in the Kobre and Kim report and it will undoubtedly seek authorization to do so. This motion is a good start. I must point out that 11 U.S.C. § 926(a) gives any creditor the chance to be appointed to prosecute causes of action that a debtor will not. This includes unions, but I doubt if they will vie to do so. We will soon find out since the statute of limitations runs out between May and July, depending on the Title III debtor.
The Board announced on Thursday that it had hired the law firm of Brown Rudnick, LLP, at $790 an hour, to determine and prosecute causes of action on behalf of the Title III debtors. I found it ironic that the firm’s paralegals will bill at $270 an hour, which is more than what most lawyers in Puerto Rico bill. Oh well.
During a hearing in the U.S. Senate, FEMA stated that it had no confidence the PR electric grid could survive a hurricane today. Not only FEMA, but all Puertorricans doubt this. Of course, the Governor immediately differed from this opinion. Some things never change.
Today, Judges Torruella, Kayatta and Thompson are hearing at 2 pm the Aurelius appeal on the Board’s appointment. Torruella and Thompson heard oral arguments on two other appeals on November 5 and Judge Kayatta has actually authored a couple of PROMESA opinions. Given that the Aurelius challenge may impact the status of Puerto Rico, which Judge Torruella absolutely hates, he is the wild card on the argument. I hope to have some analysis by Tuesday.
Finally, the government and some of the municipalities have started to pay the Christmas bonus notwithstanding the Boards warnings that the Commonwealth would run out of money. Wonder what would happen if it actually did run out of money. Will the Board request control of the Commonwealth’s bank accounts? Who knows?
Welcome to your weekly Title III update for the November 19, 2018. Last week’s developments all lead up to Tuesday’s hearing on the COFINA disclosure statement.
There were only five objections to the COFINA disclosure statement, two from individuals, one from the Bank of New York Mellon, one from Lehman Brothers Holdings and one from four local credit unions, albeit this one was filed a day late. The Board filed its answer to said objections, including the credit unions objection, essentially saying that the disclosure statement filed on Friday, November 16, gave the requested information that objectors found lacking. As to the objections of individuals, the Board swept them away, not surprising since they were rather scatterbrained and filed pro se. It remains to be seen what Judge Swain will say tomorrow but I doubt she will reject the disclosure statement. At most, she may require more information.
The American Federation of Teachers and the American Federation of State, County and Municipal Employees International Union, AFL-CIO, filed an adversary complaint against the Board, governor and Banco Popular de Puerto Rico, claiming that pursuant to Law 106-2017, the government was to segregate the retirement contributions of employees and they would have control of how they would invest it. The complaint avers that the money is deposited with Banco Popular and there is no interest paid on it. Interesting complaint if the facts alleged are true.
In addition, the Unión de Empleados de Oficina y Profesionales de la Autoridad de Edificios Públicos, Unión Insular de Trabajadores Industriales y Construcciones Eléctricas Inc., Unión Independiente de Empleados of the Puerto Rico Water and Sewer Authority, Unión de Empleados de Oficina Comercio y Ramas Anexas, Puertos, Unión de Empleados del Banco de la Vivienda, Unión de Empleados Profesionales Independientes, Unión Nacional de Educadores y Trabajadores de la Educación, Asociación de Inspectores de Juegos de Azar, Asociación de Jubilados de la Autoridad de Energía Eléctrica, and VAMOS, Movimiento de Concertación Ciudadana Inc., filed an objection to the Commonwealth-COFINA settlement. In a separate motion, Service Employees International Union (“SEIU”) and International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) filed another objection to the same settlement. PROSOL-Utier also filed an objection and the Federación de Maestros joined the objection. The Official Committee of Retired Employees of the Commonwealth of Puerto Rico filed a limited objection to the aforesaid settlement.
The objections to the settlement rest on the idea that Puerto Rico will pay too much in the COFINA settlement. Three problems with this idea. One, the objections are not accompanied by any economic analysis/expert report evidencing this deficit and two, if Puerto Rico cannot pay the COFINA settlement, what can it pay for debt? The third problem is that this settlement was, I stated in last week’s report, approved by Judge Swain on November 9. The motivations for filing these objections this late in the game are unclear to me, but I doubt they will sway Judge Swain from reconsidering her decision on the issue.
In addition, the Board requested until December 31, 2018 to oppose Peaje’s request for certiorari from the SCOTUS. Interesting, since statistically petitions where an opposition is filed have a higher granting of cert than those that are not opposed. In any event, the likelihood of it being granted is very low since the SCOTUS grants around 80 certs of the over 10,000 petitions it receives. Let’s see what happens.
Welcome to your weekly Title III update for November 12, 2018. Since I have already provided an update on some of the developments last Monday and Tuesday, I will concentrate on what occurred from Wednesday onwards.
On November 7, 2018, Judge Swain held the November Omnibus Hearing. The first order of business was the Board report by Mr. Bienestock. He explained that the Court wanted an update on the McKinsey issue (whether it holds or had held PR bonds while working for the Board) and explained that Proskauer represented this company so the Board hired an outside counsel. This counsel reported from NY that he was beginning his investigation and hoped to have a public report in a couple of months and that he had no substance to report. He then said that he hoped to have a report by the end of the year. So, either at the end of the year or two months from now we will have a report on this issue. Hopefully.
PREPA is doing well and does not need to borrow to cover its expenses. Mr. Bienestock made a distinction from operating expenses to the need to make further repairs. He also reported that PREPA was examining the answers to the request for proposals for the distribution of electricity. Later next year, those companies deemed eligible will be able to bid for a P3. He also mentioned that as to the generation, there was a need for companies to know how much of the debt they would have to carry, how much they would have to pay for the right to generate and the mix of the fuels. I would add that they need to know if they have to accept the union contracts.
Bienestock also said that on that same day there was mediation with the PREPA ad hoc group of uninsured bondholders and one of the monolines was going to join. He hoped to continue discussions with other monolines. This adds to my theory that the monolines request for a receiver was an attempt to get better treatment in the RSA. On the other hand, PREPA bondholders have a real need to have responsible management and the government has shown time and again it is incapable of providing it.
The Board was very confusing when discussing when other Plans of Adjustment would be filed. Mr. Bienestock said that it was possible that another one could be filed in the summer (ERS?) but was not emphatic. He also mentioned the possibility of other Title III cases being filed, mentioning PRASA and the UPR, but making clear that the latter was more likely to be a Title VI. My view is that these two may go into Title III next year due to two issues: Union contracts and pensions. It is very doubtful that the PR Legislature would change these contracts or even would have the power to do so. Moreover, under in Bayron Toro v. Serra, 119 D.P.R. 605 (1987), the PR Supreme Court has stated that those pensioners who are receiving pension payments have a constitutional right to it. It behooves my mind that the Board can force said changes outside Title III. If it insists in those changes, Title III is the only recourse.
Mr. Bienestock also mentioned that he had information that the Legislature was about to approve a 29% retention of payment to all US lawyers that did work in the case outside PR. He made it clear that if faced with this, his firm would have to increase its fees, and obviously all others would. Judge Swain was dismayed and it was very telling that counsel for AAFAF had no information as to this according to Mr. Bienestock. Very bad news indeed. Let’s see what happens.
The Omnibus objections to proofs of claim was discussed and these will be the ones having to do with double filing of bond claims and others that did not belong in one case or the other. This should start at the end of the year. The UCC mentioned that it had been discussing the way in which the proofs of claims of unsecured creditors would be resolved. Mr. Despin mentioned mediation and a short discovery and hearings. Although a good idea, we need more information as to how this will work.
The rest of the week not much happened. Judge Swain approved the settlement between the Commonwealth and COFINA in the Commonwealth Title III case. Also, the Legislature passed the COFINA bill required by the agreement. Many PPD politicians and radio analysts objected to the deal but none had filed any objection, not even an amicus brief. Moreover, they did not offer any alternative to the deal. Those type of objections are easy to do, but no Court will pay them any heed.
February 2, 2019: Parties to cross-designate deposition testimony.
The Parties further propose that a hearing on this Motion take place on February 5, 2019 in New York, or on February 6, 2019 either in New York or San Juan.
What this shows is that the Board does not have to make public whether it will oppose the request until January 4, 2019, a full month’s extension. Since there are persistent rumors the Board is considering joining the Assured request, this will give it more time to ponder the issue. In addition, since I think this motion is a ploy of the monolines to obtain better treatment in the PREPA RSA, this will give the parties time to negotiate. We will see.
October 31, 2018 – Date of issuance and first publication of public notice of RFQ by the Authority.
November 14, 2018 – Deadline for submission of Requests for Clarification with respect to this RFQ by prospective Respondents (“RFC”).
November 20, 2018 – Deadline for the Authority to release responses to RFCs.
December 5, 2018 – Deadline for submission of SOQs (no later than 5:00 pm AST).
January 16, 2019 – Estimated date for notification of Qualified Respondents.
All SOQs must be submitted by no later than December 5, 2018 at 5:00 pm AST (the “Submission Deadline”) in the manner set forth in Section 4 of this RFQ.
 strong technical expertise, with a track record of high-quality operations.
First thing to note is that as Mr. Bienestock told Judge Swain, the issue of how much of the PREPA debt will be taken over by the buyers or lessees of PREPA is still an open question. In addition, the monopoly will continue, at least in regards to the transmission and distribution, since a single company will be in charge of buying power and billing customers. This entity will probably be the most important entity in the whole system but we still do not have the Energy Policy bill or PREPA’s Integrated Resources Plan. Hence, I see it difficult for the new entity and the P3 Government agency to comply with the timetable. We will see.
Welcome to a special edition of the Monday update on the two oral arguments today before the First Circuit.
Today, two different decisions by Judge Swain were argued on appeal before Judges Torruella, Howard and Thompson of the First Circuit. In the first case, Aurelius appealed the dismissal of its request for a declaratory judgment that it had a lien. Right at the start of the GO group’s oral argument, Judge Torruella asked whether this issue was not better left for the Plan of Adjustment. Judge Thompson then joined Torruella in her question. Mr. Robbins, arguing for GO’s, said it was not and that Bankruptcy Rule 7001 allowed it to be done that way. Later, Judge Torruella asked whether the Judge was in the best position to determine when to litigate this issue. Robbins tried to wiggle out of the discretionary function of the question by pointing out that Judge Swain had ruled she was constrained by Article III of the Constitution requirement of a case or controversy and had not even discussed discretion. Judge Thompson followed up by asking whether Judge Swain had said discretion and Robbins had to say yes—but that if that were the issue, appellants would detail why the discretion would require a declaratory judgment. Judge Howard then asked whether the declaration would affect the behavior of the parties. He was told yes since the declaration would not force the Commonwealth to act but would tell it what the law was. Judge Torruella then said a declaratory judgment could change behavior. Robbins quoted the PREPA case to which Judge Howard, who sat in that panel, distinguished the case. When the Board came to argue, the Judges only asked one question and it was at the end. When the Retirees Committee argued, there were no questions.
Based solely on the questions posed by the panel, it is unlikely Judge Swain will be reversed on the merits. She could be reversed by a decision in which the Circuit states that the declaratory judgment was not barred by Article III but with instructions to determine in her discretion whether to grant said declaratory judgment. Given Judge Swain’s inclinations, it is likely she will decline to decide at this juncture.
The second case was Assured Guarantee v. Commonwealth, a case involving sections 922 and 928 of the Bankruptcy Code. Judge Swain decided that section 922 did not require payment of a revenue bond but simply allowed the debtor to pay if it felt like it. This ruling has put fear into the muni world and from the start, I thought Assured had a good argument. A few minutes into Mr. Allenberg’s argument for Assured, Judge Howard asked whether 922 was not an option. After Mr. Allenberg explained his point, Judge Howard said, “You have not said anything to the contrary.” OUCH!!!
Mark Harris argued for the Board and the only question was from Judge Howard who asked to be provided with citations to some cases. Luc Despin argued for the UCC and got no questions.
Again, the questions were quite hostile to appellants but I think they have a good argument. If appellants lose, it is conceivable that due to the importance of the ruling, they may try for a certiorari from the SCOTUS. Let’s see what happens.
Welcome to your weekly Title III update for November 5, 2018. Interesting developments and more to come this week.
Last week the Retirees Committee filed a motion in the COFINA litigation requesting an extension to the time to object the settlement and Plan of Adjustment. The UCC joined the motion but Judge Swain denied the request. Any doubt that the Judge will bend over backwards to advance this settlement? What no one is talking about is the fact that the COFINA Plan of Adjustment requires the Puerto Rico Legislature to pass certain laws. Although the administration presented the bill, there has been no movement except it being sent to the different commissions. Even more importantly, the last day of the legislative session is next Thursday, meaning that it must be approved by that date. Unless the governor calls for an extraordinary session, the Legislature comes back on January 8, 2019, only 9 days before the hearing for the approval of the Plan of Adjustment.
Given that the Board informed the governor and the Legislature that the much announced tax reform is contrary to the Fiscal Plan, the following question arises: Will Senate President Thomas Rivera Schatz simply ignore the COFINA bill to pressure the Board to approve the tax reform? Your guess is as good as mine, but if the Legislature scuttles the COFINA deal, Judge Swain will not be amused. Since the only thing Puerto Rico’s politicians care about is reelection—and not what is best for the island—it is a distinct possibility.
In addition, the UCC—who had informed the Court that it did not believe the COFINA deal was feasible with the June Fiscal Plan—requested an extension to continue negotiations with the Board, AAFAF and COFINA agent on whether it would object to the settlement it negotiated. The extension was granted and ends today. Weird, weird, weird but then again, this is Puerto Rico.
Based on financial reporting provided to the Oversight Board, it appears the Government authorized a large amount of tax credit agreements to private companies in May, August, and September despite the Government’s continued tenuous fiscal position. The issuance of tax credits at this volume is concerning and, if continued, expenditures at this level would further exacerbate the fiscal challenges already faced by Puerto Rico’s economy. Indeed, I remind you that the Commonwealth is currently not paying most of its debt service and that the Government’s fiscal situation would be materially worse if there was not a stay on litigation in place from the Title III court. Moreover, there continues to be insufficient public disclosure and justification on the total amount of tax credits authorized and no disclosure of the return on investment from the tax credits being issued.
Also, today is the Aurelius appeal, not on the constitutionality of the Board but on certain liens. The constitutionality case will be heard on December 3, 2018 in Boston. Will be interesting. In addition, on Tuesday, November 6, there will be a GDB hearing and on November 7, the Omnibus.
Finally, some analysts and other persons are theorizing that the Board may not oppose the PREPA bondholders’ request for a receiver and may even join them! I have mentioned here the absolute silence of the Board as to this issue. The Board acquiesce would be an almost automatic lifting of the stay and would be a major blow to the Rosselló administration. It could mean responsible management at PREPA. Any opposition to the request for lift of the stay for the appointment has to be filed no later than December 3, 2018. Let’s wait and see.
Welcome to your weekly Title III update for October 29, 2018. Not much has happened in the case, but outside in the greater PROMESA world, it is in turmoil.
On October 23, 2018, the Board discussed and approved the new Fiscal Plans for the Commonwealth and the UPR. Although not much was new in the Commonwealth’s Fiscal Plan, the Puerto Rican government is once again decrying the “austerity” the Board is imposing and Governor Rosselló even vowed to appeal the plan in Boston (meaning the First Circuit). This is hard to do if you have not questioned the Fiscal Plan before Judge Swain. Of course, the Commonwealth got Judge Swain’s certification to appeal her decision as to the previous Fiscal Plan, and in fact, the notice of appeal was filed and docketed but the First Circuit has not ruled yet on whether it will allow it. However, given the other appeals, I doubt it will be denied.
As mentioned before, the new Fiscal Plans have new numbers as to migration and income but retained the need to reduce by millions of dollars “personnel savings,” including the Departments of Health, Education, Corrections and Police (more on this last one later). It also retains the cuts in pensions and does not provide for the payments of the Christmas bonus. Of course, the governor refuses to obey these decisions—traditionally the bonus is paid around the 15th of November, just in time for Black Friday. We will soon find out whether it will happen. Since I know that many parents in the government use this money to pay for their kids’ presents, it would be very sad if it does not happen.
The UPR Fiscal Plan is also very similar to the previous one, with increases in tuition and consolidation of campuses. Christmas bonuses are eliminated and pensions reduced. During the meeting, various university related groups and individuals voiced their concerns and displeasure with the Fiscal Plan—all done in an orderly and peaceful manner. Kudos to them.
One last thought as to the UPR pensions’ in Bayrón Toro v. UPR, 119 D.P.R. 605 (1987), the Puerto Rico Supreme Court held that persons who were receiving pension payments had a constitutional right under the Commonwealth’s constitution to receive said pension. Now in the Detroit and Stockton cases, the Court determined that state constitutional guarantees to pensioners do not trump federal bankruptcy law. The UPR, however, is not in Title III and hence I am not sure that the Board may alter Puerto Rico’s constitutional law with the stroke of a pen. Again, let’s see what happens.
I agree that the privatization process is anything but transparent but I believe it is because politicians do not want to sell PREPA and are just going through the motions. Again, we will soon find out.
The Court is aware that representatives of the Commonwealth and its Fiscal Board, USDOJ and Monitor will meet tomorrow to discuss the Reform budget. However, the scope of said meeting should go beyond said specific line item budget. A fully financed PRPB Reform Office, in and of itself, alone cannot achieve the goal the Commonwealth and United States governments agreed to, when in 2013 the Court approved the Police Reform Agreement.
In order for the Commonwealth police force to come into full constitutional compliance, as per the terms of the Agreement, the Commonwealth (Fiscal Board included) must adequately fund the PRPB, and not just the PRPB Reform Office.
Without law and order, no government within the United States — including that of a territory currently being subject to the plenary power of Congress — can function, even less reconstruct itself as contemplated under PROMESA.
This Court has an unflagging duty under Article III of the U.S. Constitution to guarantee the citizens of this jurisdiction a fully functional police department, as intended by the parties in the Agreement. As such, the Court will zealously overlook all fiscal matters that impact the Agreement itself, both directly and indirectly. The Commonwealth’s ability to adequately establish law and order in the form of constitutional policing cannot be impaired by a fiscal board, as long as this Reform Agreement is in place.
Judge Gelpí is openly saying that the Commonwealth and the Board have to come up with the money for the police reform or he will entertain motions by the parties, i.e., the Commonwealth or the DOJ. Judge Gelpí, who knows his business, knows that Section 7 and 204(d) prohibit PROMESA from interfering with federal programs dealing with safety or interfering with court issued consent decree. And knowing Judge Gelpí, he will not hesitate to act.
After the aforementioned meeting, the Board stated it was in full agreement with the police reforms but added that when it hammered the Fiscal Plan, it was given a higher number of police officers in the force and therefore, the Commonwealth had the money to fund the reform. The government is yet to put forward its position.
The Oversight Board has created a Special Claims Committee (the “Committee”) to further consider potential claims that might arise from the conduct described in the Report and is seeking submissions from interested parties to be retained to assist the Committee (“Claims Counsel”). The scope of the work should include (i) review and assessment of the Report and the factual materials that form the basis of the Report, (ii) legal research as necessary to advise the Committee regarding potential causes of action and (iii) initiation of any litigation arising from the conduct described and/or referrals to prosecutorial or regulatory bodies.
The Commonwealth Title III case was filed on May of 2017, hence, the statute of limitations to bring any actions against those causes of action mentioned above expires in May of 2019. To seek counsel to evaluate the myriad of documents Kobre & Kim needs to review and then file causes of action before May 2019 behooves the mind. The UCC has been chomping at the bit to do this job, it is willing and able and time is running out. This letter to me is incomprehensible.
The Retiree Committee requests that the Court change the Settlement Objection Deadline from November 16, 2018 at 5:00 p.m. (Atlantic Standard Time) to the same date and time as the deadline to be set by the Court with respect to the filing of any objections to the COFINA Plan of Adjustment, or alternatively, assuming the Court maintains the January 16, 2019 hearing date to consider confirmation of the COFINA Plan of Adjustment, December 31, 2018 at 4:00 p.m. (Atlantic Standard Time), in accordance with the Case Management Procedures, to provide parties in interest a sufficient and appropriate opportunity to respond to the Settlement Motion.
We must remember that the UCC filed a motion saying the COFINA settlement could not be funded with the June Commonwealth fiscal plan and mentioned that the Retirees’ Committee agreed. Seems they need time to analyze whether the settlement is feasible. We will see.

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 § 926
 v. 
 v. 
 v.