Court Opinion

ID: 4115142
Source: CourtListenerOpinion
Date Created: 2017-01-11 22:00:34.023067+00
Date Added: 2024-06-11T13:14:39.721937
License: Public Domain

United States Court of Appeals
                       For the First Circuit

No. 16-2377

                       PEAJE INVESTMENTS LLC,

                         Movant, Appellant,

                                 v.

                  ALEJANDRO GARCÍA-PADILLA ET AL.,

                       Respondents, Appellees.

No. 16-2430

                       PEAJE INVESTMENTS LLC,

                          Movant, Appellee,

                                 v.

                  ALEJANDRO GARCÍA-PADILLA ET AL.,

                       Respondents, Appellees,

              FINANCIAL OVERSIGHT AND MANAGEMENT BOARD,

                         Movant, Appellant.

No. 16-2431

    ASSURED GUARANTY CORPORATION; ASSURED GUARANTY MUNICIPAL
                          CORPORATION,

                       Plaintiffs, Appellees,

                                 v.

                 COMMONWEALTH OF PUERTO RICO ET AL.,
                       Defendants, Appellees,

              FINANCIAL OVERSIGHT AND MANAGEMENT BOARD,

                         Movant, Appellant.

No. 16-2433

    ALTAIR GLOBAL CREDIT OPPORTUNITIES FUND (A), LLC ET AL.,

                        Movants, Appellants,

          CLAREN ROAD CREDIT MASTER FUND, LTD. ET AL.,

                              Movants,

                                 v.

    ALEJANDRO GARCÍA-PADILLA, in his official capacity as the
                 Governor of Puerto Rico, ET AL.,

                       Respondents, Appellees.

No. 16-2435

          PUERTO RICO FIXED INCOME FUND V, INC. ET AL.,

                         Movants, Appellees,

                                 v.

    ALEJANDRO GARCÍA-PADILLA, in his official capacity as the
                 Governor of Puerto Rico, ET AL.,

                       Respondents, Appellees,

              FINANCIAL OVERSIGHT AND MANAGEMENT BOARD,

                         Movant, Appellant.
No. 16-2437

     BRIGADE LEVERAGED CAPITAL STRUCTURES FUND LTD. ET AL.,

                        Plaintiffs, Appellees,

                                  v.

    ALEJANDRO J. GARCÍA-PADILLA, in his official capacity as
                Governor of Puerto Rico, ET AL.,

                        Defendants, Appellees,

              GOVERNMENT DEVELOPMENT BANK OF PUERTO RICO,

                              Defendant,

               FINANCIAL OVERSIGHT AND MANAGEMENT BOARD,

                          Movant, Appellant.

No. 16-2438

         NATIONAL PUBLIC FINANCE GUARANTEE CORPORATION,

                         Plaintiff, Appellee,

                                  v.

                  ALEJANDRO J. GARCÍA-PADILLA ET AL.,

                        Defendants, Appellees,

               FINANCIAL OVERSIGHT AND MANAGEMENT BOARD,

                          Movant, Appellant.

No. 16-2439

                  US BANK TRUST NATIONAL ASSOCIATION,

                         Plaintiff, Appellee,
                                 v.

 ALEJANDRO GARCÍA-PADILLA, in his official capacity as Governor
           of the Commonwealth of Puerto Rico, ET AL.,

                       Defendants, Appellees,

              FINANCIAL OVERSIGHT AND MANAGEMENT BOARD,

                         Movant, Appellant.

No. 16-2440

                   DIONISIO TRIGO-GONZALEZ ET AL.,

                       Plaintiffs, Appellees,

                   CARMEN FELICIANO VARGAS ET AL.,

                             Plaintiffs,

                                 v.

 ALEJANDRO GARCÍA-PADILLA, in his official capacity as Governor
                     of Puerto Rico, ET AL.,

                       Defendants, Appellees,

              FINANCIAL OVERSIGHT AND MANAGEMENT BOARD,

                         Movant, Appellant.

          APPEALS FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF PUERTO RICO
         [Hon. Francisco A. Besosa, U.S. District Judge]

                               Before

                         Howard, Chief Judge,
                Thompson and Kayatta, Circuit Judges.
     G. Eric Brunstad, Jr., with whom Allan S. Brilliant, Robert
J. Jossen, Andrew C. Harmeyer, Dechert LLP, Dora L. Monserrate
Peñagarícano, and Monserrate Simonet & Gierbolini, LLC were on
brief, for Peaje Investments LLC.
     Erin E. Murphy, with whom Susan Marie Davies, Michael F.
Williams, Peter A. Farrell, Matthew D. Rowen, Kirkland & Ellis
LLP, and Margarita Luisa Mercado-Echegaray, Solicitor General of
Puerto Rico, were on brief, for Alejandro García-Padilla, Juan C.
Zaragoza-Gómez, Luis Cruz-Batista, and Carmen Villar-Prados.
     Michael Luskin, with whom Stephan E. Hornung and Luskin, Stern
& Eisler LLP were on brief, for Financial Oversight and Management
Board.
     Richard A. Chesley, with whom John M. Hillebrecht, Neal F.
Kronley, and DLA Piper LLP (US) were on brief, for The Employees
Retirement System of the Commonwealth of Puerto Rico.
     Sparkle L. Sooknanan, with whom Beth Heifetz, Geoffrey S.
Stewart, Bruce Bennett, Benjamin Rosenblum, Jones Day, Alfredo
Fernández-Martínez, Delgado & Fernández, LLC, Arturo Díaz-
Angueira, José C. Sánchez-Castro, Alicia I. Lavergne-Ramírez,
Maraliz Vázquez-Marrero, Lopez Sanchez & Pirillo LLC, Glenn M.
Kurtz, John K. Cunningham, Jason N. Zakia, and White & Case LLP
were on brief, for Altair Global Credit Opportunities Fund (A),
LLC, Glendon Opportunities Fund, LP, Nokota Capital Master Fund,
L.P., Oaktree-Forrest Multi-Strategy, L.L.C. (Series B), Oaktree
Opportunities Fund IX, L.P., Oaktree Opportunities Fund IX
(Parallel 2), L.P., Oaktree Value Opportunities Fund, L.P., SV
Credit, L.P., Claren Road Credit Master Fund, Ltd., Claren Road
Credit Opportunities Master Fund, Ltd., and Ocher Rose, L.L.C.

                         January 11, 2017
            HOWARD,    Chief   Judge.     These   appeals     involve   the

application of certain provisions of the Puerto Rico Oversight,

Management, and Economic Stability Act ("PROMESA"), see 48 U.S.C.

§§ 2101-2241, a statute enacted by Congress in June 2016 to address

Puerto Rico's financial crisis. As relevant here, PROMESA provides

for a temporary stay of debt-related litigation against the Puerto

Rico government.      See id. § 2194(a)-(b).   But the statute does not

leave creditors entirely without recourse during the presumptive

pause.     Rather, it allows them to move for relief from the stay

and directs district courts to grant such relief "after notice and

a hearing . . . for cause shown."         Id. § 2194(e)(2).     Because we

conclude that Movant-Appellant Peaje Investments LLC ("Peaje")

failed to set forth a legally sufficient claim of "cause" to lift

the PROMESA stay, we affirm the district court's denial of its

lift-stay motion.      By contrast, the various appellants in Altair

Global Credit Opportunities Fund (A), LLC v. García-Padilla (No.

16-2433) (the "Altair Movants" and, together with Peaje, the

"Movants")1 presented sufficient allegations to entitle them to a

hearing.     Accordingly, we vacate the district court's denial of

     1 Some of the co-movants in this case elected not to appeal.
For simplicity, this opinion uses the phrase "Altair Movants" to
refer only to those movants that have appealed. Appellee García-
Padilla, who was solely an official capacity defendant in these
appeals, is no longer Governor of Puerto Rico. We use his name in
this opinion merely to avoid confusion.

                                  - 6 -
their lift-stay motion and remand for the court to hold such a

hearing.

                                I.

           Peaje is the beneficial owner of certain bonds issued by

the Puerto Rico Highways and Transportation Authority ("PRHTA").

The bonds are secured by a lien on toll revenues, among other

things.    In July 2016, Peaje initiated the instant action in

district court by filing a motion to lift the PROMESA stay so that

it could challenge the diversion of PRHTA toll revenues pledged as

collateral for the bonds.   Peaje alleged that, acting pursuant to

the Puerto Rico Emergency Moratorium and Financial Rehabilitation

Act ("Moratorium Act"), see 2016 P.R. Laws Act 21, the Puerto Rico

government was diverting the toll revenues to other uses, thereby

diminishing the value of Peaje's collateral.

           About two months later, the Altair Movants, holders of

certain bonds issued by the Commonwealth's Employees Retirement

System ("ERS"), filed a similar motion to lift the PROMESA stay.

The Altair Movants claimed that the Commonwealth had suspended

required transfers to the fiscal agent of employer contributions

pledged as collateral for the bonds.

           PROMESA's stay of the commencement of certain actions

until February 15, 2017, applies to the lawsuits the Movants seek

to pursue.   See 48 U.S.C. § 2194(d)(1)(A)(i).    The stay may be

extended until as late as April 17, 2017, if the district court

                               - 7 -
determines that additional time is needed to complete a voluntary

restructuring process, or to May 1 if the Financial Oversight and

Management Board ("Board") makes a similar finding.              See id.

§ 2194(d)(1)(B)-(C).       The district court is directed to grant

relief from the PROMESA stay "for cause shown" after "notice and

a hearing."    Id. § 2194(e)(2).

            After consolidating the actions, the district court

scheduled a November 3 hearing on the motions to lift the PROMESA

stay for cause.      On the eve of the hearing, however, the court

issued an order denying the lift-stay motions.             In seeking to

define the "cause" standard, the court looked to the Bankruptcy

Code's automatic stay provision.           The court held that "lack of

adequate protection" for creditors constitutes cause for lifting

the PROMESA stay, just as it does under the Bankruptcy Code.

Turning to the Movants' specific claims, the court held that

neither Peaje nor the Altair Movants lacked adequate protection.

Because the toll revenues are "constantly replenished," Peaje

continued "to hold a security interest in a stable, recurring

source of income that will eventually provide funds for the

repayment     of   the   PRHTA   bonds."      Similarly,   the   employer

contributions in which the Altair Movants claimed an interest "are

a perpetual revenue stream whose value is not decreased by the

Commonwealth's acts of temporary suspension."        The Movants timely

appealed.

                                   - 8 -
                                              II.

A.     Appellate Jurisdiction

                  As    an   initial    matter,        we    address      our    appellate

jurisdiction under 28 U.S.C. § 1291.                   In the analogous bankruptcy

context,2 we have held that the denial of relief from a stay is

not necessarily a final decision sufficient to confer appellate

jurisdiction.            See In re Atlas IT Exp. Corp., 761 F.3d 177, 185

(1st       Cir.    2014).       But    such     a    decision       is   final   where    it

"conclusively            decide[s]      the     fully-developed,           unreviewable-

elsewhere issue that triggered the stay-relief fight."                           Id.     The

order on appeal here did precisely that.                     It rejected the Movants'

substantive            arguments,     holding       that    their    interests    in     the

collateral were adequately protected.                       After that ruling, there

was nothing left for the district court to do.

B.     Denial of Relief from Stay

                  Turning to the merits of the lift-stay motions, the

parties primarily dispute two issues concerning whether actions by

Puerto Rico that impair or remove the collateral securing the

       2
       Appellees García-Padilla, Zaragoza-Gómez, Cruz-Batista, and
Villar-Prados seek to distinguish the district court's refusal to
lift the PROMESA stay from a similar ruling on a motion to lift a
bankruptcy stay, primarily because the PROMESA stay is of limited
duration and is designed to protect unique interests. While these
differences may bear on whether the stay should be lifted, they do
not signal congressional intent for the denial of stay relief to
have different jurisdictional consequences in these two related
contexts. Compare 48 U.S.C. § 2194, with 11 U.S.C. § 362.

                                           - 9 -
pertinent bonds is cause for lifting the stay:              (1) whether such

an impairment or removal satisfies PROMESA's "cause" standard if

it leaves the creditor's interest in having the debt repaid

inadequately protected; and (2) if so, did the district court

commit reversible error by failing to conduct a hearing on whether

the Movants here were inadequately protected.              On the record in

this case, we answer the first question in the affirmative.                  On

the second question, we issue a split decision.                  Because Peaje

failed even to make a legally sufficient claim that it lacked

adequate protection, we conclude that the district court did not

commit reversible error in denying its lift-stay motion without an

evidentiary hearing.       The Altair Movants, on the other hand, were

entitled to such a hearing.

            On the threshold issue of whether lack of adequate

protection constitutes cause to lift the PROMESA stay, Appellees

García-Padilla, Zaragoza-Gómez, Cruz-Batista, Villar-Prados, and

ERS (together, the "Appellees") point out that the relevant section

of the Bankruptcy Code, unlike PROMESA, expressly defines "cause"

to include lack of adequate protection.                 Compare 11 U.S.C. §

362(d)(1),    with   48   U.S.C.      §   2194(e)(2).    They    contend   that

PROMESA's    omission     on   this   point    is   meaningful   and   reflects

Congress's intent that "cause" not be defined to include actions

impairing the collateral in a manner that leaves the interest in

having the debt repaid inadequately protected.

                                      - 10 -
             But the Appellees' contention runs headlong into the

"cardinal principle" of constitutional avoidance.                Crowell v.

Benson, 285 U.S. 22, 62 (1932).       Under this canon, when confronted

with a statute of questionable constitutional validity, we must

"first ascertain whether a construction . . . is fairly possible

by which the [constitutional] question may be avoided."             Id.    If

so, we adopt that construction.             In the bankruptcy context,

Congress's explicit designation of lack of adequate protection as

cause to lift a stay was based, at least in part, on constitutional

concerns.     See H.R. Rep. No. 95-595, at 339 (1977), reprinted in

1978 U.S.C.C.A.N. 5963, 6295 (explaining that the concept of

adequate    protection   "is   derived   from   the   [F]ifth    [A]mendment

protection of property interests"). Indeed, prior to the enactment

of the current bankruptcy stay provision, the Supreme Court had

recognized     that   creditors    are   constitutionally       entitled   to

protection "to the extent of the value of the[ir] property."

Wright v. Union Cent. Life Ins. Co., 311 U.S. 273, 278 (1940); see

also United States v. Sec. Indus. Bank, 459 U.S. 70, 75-78 (1982)

(applying principle of constitutional avoidance to provision of

Bankruptcy Code where a contrary reading "would result in a

complete destruction of the property right of the secured party"

in its collateral).        The PROMESA stay implicates these same

constitutional concerns.          Under the Appellees' reading of the

statute, the Commonwealth could expend every penny of the Movants'

                                   - 11 -
collateral, leaving the debt entirely unsecured.              Because we doubt

the constitutionality of such a result, we hold that lack of

adequate protection for creditors constitutes cause to lift the

PROMESA stay.3

            In the bankruptcy context, one "common form" of adequate

protection is "the existence of an equity cushion."               3 Collier on

Bankruptcy ¶ 362.07[3][d][i] (Alan N. Resnick & Henry J. Sommer

eds., 16th ed. 2016) [hereinafter Collier]; see also Baybank-

Middlesex v. Ralar Distribs., Inc., 69 F.3d 1200, 1203 (1st Cir.

1995).      Such an equity cushion exists "if the value of the

collateral available to the creditor exceeds by a comfortable

margin   the    amount    of    the    creditor's     claim."      Collier   ¶

362.07[3][d][i].       The widespread acceptance of an equity cushion

as a form of adequate protection makes eminent sense.              Indeed, the

"interest"     for   which     the    bankruptcy    stay     statute   requires

protection is "the right of a secured creditor to have the security

applied in payment of the debt."               United Sav. Ass'n of Tex. v.

Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 370 (1988)

(emphasis    added).     Therefore,      an    oversecured    creditor   cannot

     3This conclusion is also consistent with bankruptcy precedent
considering possible harm to creditors as part of the "cause"
inquiry, even before the concept of adequate protection was
explicitly codified. See, e.g., In re Timbers of Inwood Forest
Assocs., Ltd., 793 F.2d 1380, 1390-91 (5th Cir. 1986), aff'd, 484
U.S. 365 (1988); In re Anchorage Boat Sales, Inc., 4 B.R. 635,
641-42 (Bankr. E.D.N.Y. 1980).

                                      - 12 -
"demand to keep its collateral rather than be paid in full."      In

re Pac. Lumber Co., 584 F.3d 229, 247 (5th Cir. 2009).

             Here, in denying the lift-stay motions, the district

court, while not using the precise term, relied on the existence

of an equity cushion.     It cited future toll revenues and employer

contributions, which it concluded would eventually flow to the

fiscal agents in sufficient quantity to repay the bonds, to support

its finding of adequate protection. On appeal, the Movants contend

that the district court erred in finding these future funds

sufficient to ensure repayment of the bonds without first holding

a hearing.

             PROMESA appears to contemplate that rulings on lift-stay

motions will issue only "after notice and a hearing."      48 U.S.C.

§ 2194(e)(2). And we agree that it certainly could have simplified

matters had the district court conducted a hearing in these cases.

But, under the bankruptcy stay statute, we have held that this

same language does not require an actual hearing in every case.

See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 814

F.2d 844, 847 (1st Cir. 1987) (affirming decision vacating stay

without a hearing where "the court had the benefit of the papers

filed by both parties" and the debtor "identified no . . . viable

reasons for maintaining the stay"); see also In re Sullivan Ford

Sales, 2 B.R. 350, 354 (Bankr. D. Me. 1980) ("There was complete

awareness on the part of the principal congressional architect of

                                - 13 -
the Code that 'after notice and a hearing' did not contemplate a

hearing in every instance.").              A hearing may be unnecessary where,

for example, the material facts are not disputed.                             See In re

Marron, 485 B.R. 485, 491 (D. Mass. 2012).

             The      Appellees    contend       that    no    hearing     was    required

because    the     Movants   did    not     claim       or    propose    to   show   facts

sufficient       to    establish    lack     of     adequate       protection.         The

significance of this purported shortcoming depends upon PROMESA's

allocation of the burden of proof.                  We begin with the statutory

language, which provides that district courts shall grant relief

from the stay "for cause shown."                   48 U.S.C. § 2194(e)(2).             By

requiring a "show[ing]" of cause, the statute places the burden on

the movant.           Where, as here, the only cause identified is an

impairment of collateral that leaves the interest in repayment

inadequately protected, it follows that the movant bears the burden

of establishing such cause.            In the bankruptcy context, however,

Congress    altered      this     result    by    enacting       an     express   burden-

shifting framework under which the movant "has the burden of proof

on the issue of the debtor's equity in property," but the debtor

"has the burden of proof on all other issues."                    11 U.S.C. § 362(g).

PROMESA contains no analogous provision.

             While the complexity of the Bankruptcy Code and the sui

generis nature of PROMESA counsel caution in too readily inferring

that any silence in PROMESA on a matter addressed in the Code is

                                       - 14 -
a legislative rejection of the Code's approach on that matter,

such differences nevertheless do raise the possibility that such

was precisely Congress's intent.           See Helmer v. Goodyear Tire &

Rubber Co., 828 F.3d 1195, 1202 (10th Cir. 2016) (explaining that

where "a legislature models an act on another statute but does not

include a specific provision in the original, a strong presumption

exists that the legislature intended to omit that provision"

(citation omitted)).      Enhancing that possibility here is the fact

that, prior to the enactment of § 362, bankruptcy courts placed

the burden on creditors to show that they would be harmed by

continuation of the stay.       See, e.g., In re Planned Sys., Inc., 78

B.R. 852, 858 (Bankr. S.D. Ohio 1987); Anchorage Boat Sales, 4

B.R. at 641 n.6.        Where the alleged harm was a decrease in the

value of the creditor's collateral, the required showing included

evidence "that the value of the collateral [was] not substantially

in excess of the amount of the debt."             In re Wynn Homes, Inc., 14

B.R. 520, 523 (Bankr. D. Mass. 1981).               In light of Congress's

decision    not    to   transplant      the     Bankruptcy   Code's      express

alteration of the pre-Code burden regime into PROMESA, we hold

that PROMESA, like the pre-Code regime, places the burden on

creditors     to   establish    cause,        including   lack   of     adequate

protection.

            Indeed,     there   are    sound    policy    reasons     supporting

Congress's choice to allocate the burden of proof differently under

                                      - 15 -
PROMESA and the Bankruptcy Code.                     The PROMESA stay, while similar

in operation to its bankruptcy counterpart, was designed to address

a truly unique situation, namely the "immediate . . . and imminent"

fiscal          crisis   facing       Puerto    Rico.        48    U.S.C.     §   2194(n)(1).

Congress found that a stay of litigation was necessary to allow

the Commonwealth "a limited period of time during which it can

focus its resources on negotiating a voluntary resolution with its

creditors          instead       of     defending       numerous,        costly        creditor

lawsuits."          Id. § 2194(n)(2).              Moreover, the PROMESA stay, which

lasts       a    maximum    of    about      ten    months,       is   less   burdensome    to

creditors than a bankruptcy stay, which may persist for the

entirety of the bankruptcy proceeding.4                       In light of the temporary

nature of the PROMESA stay, as well as Congress's express intent

to   minimize           "creditor      lawsuits,"       it    makes     sense     to   require

creditors          to    shoulder      the     burden   of    demonstrating         that   the

impairment of the collateral will likely harm their protected

interest in repayment.

                  Thus, in order to establish an entitlement to relief,

the Movants were required to prove, respectively, that future toll

revenues and employer contributions more likely than not failed to

        4
       If debt-adjustment proceedings are commenced under Title
III of PROMESA, the statute contemplates that the bankruptcy stay
provision will become fully applicable. See 48 U.S.C. § 2161(a)
(incorporating by reference 11 U.S.C. § 362). Assuming that this
possibility materializes, presumably the Movants will have the
option of seeking relief from the stay under § 362.

                                               - 16 -
provide a sufficient equity cushion to protect their interests in

the wake of the Commonwealth's ongoing diversion of collateral.

It follows that, absent any allegation that these future funds

would be insufficient, the Movants lacked a viable claim to relief,

and the district court was not required to hold a hearing to

consider a claim that was facially insufficient.           See Mitsubishi,

814 F.2d at 847.

           Peaje's claim failed to clear this hurdle.               In its

motion, Peaje alleged that the applicable bond resolution requires

the PRHTA to deposit monthly toll revenues with a fiscal agent.

The agent, in turn, credits the funds to one of several accounts,

which must be maintained at certain levels.            According to Peaje,

the   Commonwealth    has   stopped   making     the   required   deposits,

resulting in depletion of the accounts.          In opposing Peaje's lift-

stay motion, the Commonwealth responded that "[a]ny particular

toll revenue not allocated to the . . . bonds today could simply

be made up for by toll revenues collected tomorrow."          Peaje sought

to rebut this proposition by asserting that the Commonwealth failed

to "argue, let alone demonstrate, that any future collateral will

be sufficient to cover the expenses coming due" in the future "and

to make up all obligations falling into arrears during the stay

period."    This     statement   reflects    a   misunderstanding   of   the

adequate protection requirement.            While Peaje may have had a

contractual right to monthly deposits with the fiscal agent and

                                  - 17 -
the maintenance of the accounts at particular levels, its protected

interest for purposes of the lift-stay motion was limited to its

interest in repayment of the debt owed.                See Timbers, 484 U.S. at

370; Pac. Lumber, 584 F.3d at 247.                Nowhere in its district court

filings did Peaje claim that the current diversion of toll revenues

would leave that interest inadequately protected.                      In light of

Peaje's admitted security interest in future toll revenues, this

omission was fatal.

           The Altair Movants' claim, by contrast, warranted a

hearing.    Unlike Peaje, they included in their district court

filings a 2014 statement by ERS that uncertainty about future

employer contributions could affect "the repayment of the [ERS's]

bond payable."          Crucially, this alleged uncertainty applies to

contributions      from       municipalities      as   well    as   those    from   the

Commonwealth.           The    Altair   Movants'       allegations      as    to     the

insufficiency      of    future      funds   to    protect     their   interest      in

repayment of the debt entitled them to a hearing.                   ERS attempts to

avoid this result by citing a joint stipulation filed in the

district court reflecting ERS's representation that the allegedly

diverted employer contributions are currently being held in an

operating account.            The parties, however, dispute whether the

Altair Movants' lien extends to this account.                  If it does not, the

Altair   Movants    face       the   prospect     of   being    left   with    a    mere

unsecured claim.         ERS provides no authority for the proposition

                                        - 18 -
that such a claim may constitute adequate protection.          Because the

district court made no finding as to whether the Altair Movants'

lien extends to the operating account, and the parties have not

briefed the issue on appeal, we decline to address this question

in the first instance.5

C.   Denial of Intervention

          Having   established    the     need   to   remand   for   further

proceedings on the Altair Movants' lift-stay motion, we must now

consider the district court's denial of the Board's motion to

     5 We note that the Altair Movants' request for adequate
protection here appears to be quite modest. They ask only that
the employer contributions collected during the PROMESA stay be
placed "in an account established for the benefit of Movants." In
light of ERS's representation that it is not currently spending
the funds, but instead simply holding them in an operating account,
this solution seems to be a sensible one. At oral argument, ERS
expressed concern that transferring the contributions to an
account subject to the Altair Movants' lien might violate the
Moratorium Act. But this concern may not present an obstacle to
ERS's ability to settle or otherwise resolve this federal action.
See, e.g., Badgley v. Santacroce, 800 F.2d 33, 38 (2d Cir. 1986)
("When the defendants chose to consent to a judgment . . . the
result was a fully enforceable federal judgment that overrides any
conflicting state law . . . ."); Brown v. Neeb, 644 F.2d 551, 563
(6th Cir. 1981) ("A federal court's power under the Supremacy
Clause to override conflicting state laws . . . is well
established.").
     Of course, this is not the only path to a finding that the
Altair Movants' interest is adequately protected.      An equity
cushion is not the "sine-qua-non for adequate protection," which
is a "flexible concept to be tailored to the facts and
circumstances of each case." In re Smithfield Estates, Inc., 48
B.R.   910,  914   (Bankr.   D.R.I.  1985);   see  also  Collier
¶ 362.07[3][f].    Again, we leave the existence of adequate
protection to the district court to assess on remand.

                                 - 19 -
intervene as of right in those proceedings under PROMESA and

Federal Rule of Civil Procedure 24.6        We have jurisdiction to

consider an appeal from this decision.      See, e.g., In re Efron,

746 F.3d 30, 34 (1st Cir. 2014).    The Board, an entity created by

Congress to help Puerto Rico "achieve fiscal responsibility and

access to the capital markets," 48 U.S.C. § 2121(a), moved to

intervene in district court to oppose the lift-stay motions.        The

court denied the Board's motion, citing its purported failure to

attach a "pleading that sets out the claim or defense for which

intervention is sought," as required by Fed. R. Civ. P. 24(c).

          Several   circuits,   including   our   own,   have   eschewed

overly technical readings of Rule 24(c) similar to that applied by

the district court here.    See, e.g., City of Bangor v. Citizens

Commc'ns Co., 532 F.3d 70, 95 n.11 (1st Cir. 2008) (finding "no

abuse of discretion in the district court's decision to elevate

substance over form" and excuse the failure to file a pleading

with a motion to intervene); United States v. Metro. St. Louis

     6 The Board filed five additional appeals raising almost
identical issues (Nos. 16-2431, 16-2437, 16-2438, 16-2439, and 16-
2440). The movants in these cases, unlike Peaje and the Altair
Movants, have not challenged the district court's denial of their
lift-stay motions.    For this reason, the Board's appeals are
dismissed as moot. See, e.g., Pittsburgh Terminal Corp. v. Balt.
& Ohio R.R. Co., 824 F.2d 249, 256 (3d Cir. 1987) (finding appeal
from denial of motion to intervene moot where "[t]he disputes in
which [the appellant] s[ought] to protect his interests ha[d] been
resolved in his favor"). Similarly, in light of our ruling today
on Peaje's appeal, the Board's appeal in that case (No. 16-2430)
is dismissed as moot.

                                - 20 -
Sewer Dist., 569 F.3d 829, 834 (8th Cir. 2009) (finding that

"statement     of   interest    satisfie[d]    Rule   24(c)   because    it

provide[d] sufficient notice to the court and the parties of [the

movant's] interests"); Massachusetts v. Microsoft Corp., 373 F.3d

1199, 1236 n.19 (D.C. Cir. 2004) (explaining that, absent any claim

of "inadequate notice," there was "no reason to bar intervention

based solely upon" the "technical defect" of failure to attach a

pleading).     Accordingly, denial of a motion to intervene based

solely on the movant's failure to attach a pleading, absent

prejudice to any party, constitutes an abuse of discretion.             See

Providence Baptist Church v. Hillandale Comm., Ltd., 425 F.3d 309,

314-15 (6th Cir. 2005).        That is exactly what the district court

did here.

             The district court's reliance on an overly technical

reading of Rule 24(c) was particularly problematic in the unique

procedural context of this case.              The Movants initiated the

proceedings by filing motions to lift the PROMESA stay.          No other

pleadings (e.g., a complaint) were pending when the Board moved to

intervene.     The Board could hardly have been expected to respond

to a complaint that had not yet been filed.           And the Board did

attach to its motion an opposition to the requests to lift the

PROMESA stay, setting forth its position on the issue.           In these

circumstances, there was no prejudice from the Board's failure to

attach some additional unspecified pleading to its intervention

                                  - 21 -
motion.   Indeed, no party has opposed the Board's intervention in

district court or on appeal.7

           We hold that the district court's rejection of the

Board's   intervention     motion     constituted      an     insufficiently

supported exercise of discretion.           Accordingly, we remand to the

district court to apply the proper standard.         See Negrón–Almeda v.

Santiago, 528 F.3d 15, 27 (1st Cir. 2008).            Rule 24(a) requires

district courts to allow intervention where the movant "is given

an unconditional right to intervene by a federal statute."              Fed.

R. Civ. P. 24(a)(1).     While we leave the resolution of this issue

to the district court in the first instance, we note that PROMESA

appears to grant the Board such a right.         See 48 U.S.C. § 2152(a).

                                    III.

           For   the   foregoing    reasons,    we   AFFIRM    the   district

court's denial of Peaje's motion to lift the PROMESA stay, but

VACATE its denial of the Altair Movants' motion.              We also VACATE

the court's denial of the Board's motion to intervene in the

litigation of the Altair Movants' motion for relief from the stay.

     7 In denying the Board's motion, the district court relied
exclusively on our prior statement that failure to comply with
Rule 24(c) "ordinarily would warrant dismissal" of an intervention
motion. Pub. Serv. Co. v. Patch, 136 F.3d 197, 205 n.6 (1st Cir.
1998). But this statement about the "ordinar[y]" consequences of
failure to attach a pleading provides little guidance in the
present case, where the Board did attach an opposition to the lift-
stay motions clearly setting forth its position on the issue for
which it sought intervention.

                                   - 22 -
The case is remanded for further proceedings consistent with this

opinion. In conducting such proceedings, the district court should

be mindful of Congress's explicit direction to "expedite" its

disposition of the matter "to the greatest possible extent."    48

U.S.C. § 2126(d).   The parties shall bear their own costs, and the

mandate shall issue forthwith.

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