Bond insurer proposes 2 litigation schedules for pension liability dispute
By The Star Staff
One of Puerto Rico’s bond insurers, Ambac Assurance Corp., has proposed two schedules for litigation related to disputes over the amounts of pension liability, which is the largest share of debt in the bankruptcy process.
Ambac asserts that the amount in pension liabilities claimed by the Financial Oversight and Management Board is off by $9 billion. The commonwealth puts the amount at $58 billion but has not provided adequate evidence to back up the numbers, according to Ambac.
The schedules proposed by Ambac will discuss the pension dispute separately from the process to confirm a debt adjustment plan, which would restructure some $35 billion in central government debt.
One of the proposed litigation schedules will delay the confirmation of the commonwealth’s debt adjustment plan by five months, or until April 2022. The oversight board is proposing to have a debt confirmation plan by December but the Title III bankruptcy court has not adopted a schedule for the confirmation process.
The other schedule proposed by Ambac runs from July to November but it is too compressed, the bond insurer said.
The proposed schedules are in a joint status report filed this week in the federal bankruptcy court by Ambac, the oversight board, the Official Committee of Retirees, the Official Committee of Unsecured Creditors, and the Puerto Rico Fiscal Agency and Financial Advisory Authority following a June 22 court order to develop “a schedule for litigation of underlying issues concerning the quantification of pension-related claims” in connection with the confirmation of the debt adjustment plan.
Judge Laura Taylor Swain had denied Ambac’s request for a schedule of litigation to discuss the pension amount dispute but asked the parties to confer about establishing a schedule of litigation into issues that Ambac had proposed, such as the methodology and result of the quantification of pension claims.
The Unsecured Creditors Committee said it agrees with Ambac that the dispute over the commonwealth’s retiree obligations should be discussed ahead of the confirmation hearing. The oversight board said the pension objections should be part of the plan confirmation process and should not be litigated separately.
The pension amount dispute and objections to the classes of creditors are two of the biggest areas of objection to the debt adjustment plan.